Subject: File No. S7-32-04
From: Christopher C. Chaffin

September 15, 2004

On behalf of BMC Software, Inc. ("BMC"), I write in support of the Commission's proposal set forth in Release Nos. 33-8477; 34-50254 (File Number S7-32-04). BMC is an accelerated filer and is subject to the accelerated filing deadlines. BMC is also subject to the requirements of Section 404 of the Sarbanes-Oxley Act and the regulations promulgated thereunder. As such, BMC is preparing for the first ever audit of internal controls over financial reporting to be conducted by BMC;s external auditor at the same time as the normal year-end audit. As I suspect is true for all large public companies, this is a significant undertaking which we take seriously. While we understand the public policy concerns which have led to both accelerated filing deadlines and external audits of internal controls, we are supportive of the Commission's proposal to delay the implementation of the final stage of the phase-in of the accelerated deadlines. Inevitably, implementation of both sets of rules involves the same people - the Audit Committee, senior management, the accounting staff, and the external auditor, among others. As the Commission stated in its proposing release, "the proposed change would avoid subjecting accelerated filers at the same time to a further compression of filing deadlines." To fully comply with the new mandates, BMC and other similarly situated companies simply need as much time as possible. In fact, there is a practical tension in the post-Sarbanes disclosure environment. While on the one hand, more people and groups than ever before are comprehensively reviewing disclosures (e.g. Audit Committees, Disclosure Committees, CEOs and CFOs, legal counsel and external auditors), each with a heightened sense of responsibility and accountability, the deadlines are accelerating and it can be difficult to simply get all the work finished and reviewed in time. While companies like BMC will make the necessary procedural and business changes to facilitate accelerated reporting, this year is made considerably more challenging because of the first-time nature of the internal controls requirements.

In the adopting release, the Commission requests comment on the following (our answers follow each question):

* Is it appropriate to postpone the final phase-in period of the accelerated filing deadlines? COMMENT: Yes. If so, is the length of the proposed postponement appropriate, or should it be shorter or longer? COMMENT: The one-year postponement is an appropriate length of time for companies to complete the first year of the internal controls assessment and audit while instituting processes to facilitate meeting the accelerated filing deadlines.

* Would a postponed phase-in period benefit investors by helping to ensure the quality and accuracy of the information included by companies in their periodic reports? COMMENT: Yes. Each company's business is different. For those companies whose business is more complex and requires weeks to calculate periodic financial results, additional time provides time for more thoughtful analysis which leads to more complete and useful information being provided to investors. Would it disadvantage investors in any significant respect? COMMENT: Since the Commission is not proposing rolling back the already implemented accelerated deadlines (75 days for fiscal year end and 40 days for quarter end), investors should not be disadvantaged by a one-year delay in the final phase-in.

* Should we postpone the final phase-in of the accelerated filing deadlines for both annual and quarterly reports or only for annual reports given that management's internal control report must appear only in the annual report? COMMENT: Yes. The final phase-in should be postponed for both annual and quarterly reports because companies should remain focused on getting the internal controls assessment process completed. As stated above, the regular disclosure process and the internal controls assessment process typically involves the same groups of people and the process improvements required to meet accelerated quarterly filing deadlines will be difficult to implement at the same time as the internal controls assessment is occurring. It will take several quarters of process improvement and testing those improvements to meet the accelerated quarterly filing deadlines, so a one-year delay for both the annual and quarterly filing deadlines will better serve both companies and investors. Does the required disclosure about material changes to a company's internal control over financial reporting that must appear in the quarterly report warrant a postponement of the accelerated filing deadlines for quarterly reports? COMMENT: Yes. For the same reasons stated above, the compounding nature of the additional requirements and accelerated deadlines warrants a full one-year delay to permit companies to institute process changes, test those changes and produce quality reports.

* Should we provide for an extension of the filing deadlines only for accelerated filers that request an extension, for example, by providing for an extension upon the filing of a Form 12b-25 under the Exchange Act? COMMENT: No. There is a risk that the markets would view such an extension as a non-compliant, negative event. Companies like BMC who are committed to full compliance with the Commission's rules would not receive any relief from this approach. Should we only provide an extension of the filing deadlines only to certain companies such as those that demonstrate a need for the extension? COMMENT: No. There is a risk that the markets would view such an extension as a non-compliant, negative event. Companies like BMC who are committed to full compliance with the Commission's rules would not receive any relief from this approach. Since all public companies are subject to the intersection of the two rules, an objective standard is best for companies, their external auditors and the markets. A subjective standard would be unfair, difficult to administer and subject filers that might avail themselves of the extension relief to unnecessary market risk.

We appreciate the opportunity to comment on the Commission's proposal and applaud the Commission for proposing minor relief for companies in the midst of this era of unprecedented new regulation.

Very truly yours,

Christopher C. Chaffin
Senior Legal Counsel
BMC Software, Inc.