It is no secret that FCPA settlements can be monstrously expensive. When faced with such a substantial loss, publicly traded companies often have an obligation to reserve funds in anticipation of a potential settlement and to disclose the amount of that reserve. How should a company involved in settlement negotiations with the government go about setting such a reserve? When during those negotiations should the company begin to consider reserving funds for a future settlement? How should the reserve be calculated? How should it be disclosed? The Anti-Corruption Report is publishing a multi-part series addressing these and other crucial issues. This article, the first in the series, discusses the accounting principles governing the setting of the reserve, examines when during an investigation a company should set a reserve and describes who should be involved in setting the reserve. The second article in the series will discuss the issues a company should consider before setting a reserve and the risks related to setting reserves. The third installment will discuss how to calculate a reserve and how to draft the disclosures announcing the reserve. It will also include a compendium of actual FCPA reserve-related disclosures from recent SEC filings compiled with help from Intelligize’s database and search tools.