Room 4561
April 10, 2006
Rajendra B. Vattikuti
Chairman, Chief Executive
Officer and Director
Covansys Box Corporation
32605 West Twelve Mile Road
Farmington Hills, MI 48334
Re: Covansys Corporation
Form 10-K for Fiscal Year Ended December 31, 2005
Filed March 8, 2006
Dear Mr. Vattikuti:
We have reviewed the above referenced filing and have the
following comments. Please note that we have limited our review
to
the matters addressed in the comments below. Where indicated, we
think you should revise your document in response to these
comments.
If you disagree, we will consider your explanation as to why our
comment is inapplicable or a revision is unnecessary. Please be
as
detailed as necessary in your explanation. In some of our
comments,
we may ask you to provide us with supplemental information so we
may
better understand your disclosure. After reviewing this
information,
we may or may not raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form 10-K for the Year Ended December 31, 2005
Management`s Discussion and Analysis of Financial Condition and
Results of Operations
Critical Accounting Policies, page 12
1. Please explain to us why you have not provided quantitative
information within this section regarding the significant
estimates
made by management. In this regard, we note several estimate
changes
related to revenue recognition, collection of receivables, and
income
taxes that would appear relevant. You should include within this
section, to the extent material, the sensitivity of estimates to
deviations of actual results from management`s assumptions and
circumstances that have resulted in revised assumptions in the
past
or from other outcomes that are reasonably likely to occur. You
should address such factors as how accurate the
estimates/assumptions
have been in the past, how much the estimates/assumptions have
changed in the past, and whether the estimates/assumptions are
reasonably likely to change in the future. See the SEC Release
Nos.
33-8350, 34-48960 and FR-72.
Consolidated Statements of Operations, page 27
2. Please explain to us why you have not separately reported
revenues
recognized on services provided to related parties in accordance
with
Rule 4-08(k) of Regulation S-X.
Notes to Consolidated Financial Statements
Note 16. - Income Taxes, page 45
3. Please explain to us how you considered the disclosure
requirements of SAB Topic 11C as it relates to your income tax
holidays.
Note 18. - Commitments, Contingencies and Potential Liability to
Clients, page 48
4. Please explain to us how you and your auditors concluded that
disclosure regarding the ongoing investigation by our Division of
Enforcement was not required in accordance with SFAS 5.
Item 9A. Controls and Procedures, page 54
5. We note that your disclosure regarding the design of your
disclosure controls and procedures is significantly more limited
than
that required by Rule 13a-15(e) of the Exchange Act. The rule
requires, among other matters, that the disclosure controls and
procedures be designed "to ensure that information required to be
disclosed by the issuer in the reports that it files or submits
under
the Act is recorded, processed, summarized and reported, within
the
time periods specified in the Commission`s rules and forms" and to
ensure that "information required to be disclosed by an issuer is
accumulated and communicated to the issuer`s management as
appropriate to allow timely decisions regarding required
disclosure."
Please confirm, if true, that your disclosure controls and
procedures
for the relevant periods met all of the requirements of this rule
and
that you will conform your disclosure in future filings.
* * * * * * *
As appropriate, please amend your filing and respond to these
comments within 10 business days or tell us when you will provide
us
with a response. Please submit all correspondence and
supplemental
materials on EDGAR as required by Rule 101 of Regulation S-T. You
may wish to provide us with marked copies of any amendment to
expedite our review. Please furnish a cover letter with any
amendment that keys your responses to our comments and provides
any
requested information. Detailed cover letters greatly facilitate
our
review. Please understand that we may have additional comments
after
reviewing any amendment and your responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact David Edgar, Staff Accountant, at (202)-551-
3459, Mark Kronforst, Assistant Chief Accountant, at (202) 551-
3451
or the undersigned at (202) 551-3489 if you have any questions
regarding comments on the financial statements and related
matters.
Sincerely,
Brad Skinner
Accounting Branch Chief
Mr. Rajendra B. Vattikuti
Covansys Corporation
April 10, 2006
Page 3