Under the second necessary expense rule 'an expenditure must not be prohibited by law', what should you do if affirmative authority does not exist?

• A. Proceed with the expenditure
• B. Seek retroactive approval
• C. Don't do it
• D. Reclassify the expenditure

Answer: (C)

The essential requirement is that you can only incur an expenditure if there is an affirmative legal authority to do so. When that authority does not exist, you must not proceed with the spend. Without a clear legal basis, the expenditure would violate law and risk invalid obligations, improper use of funds, and potential accountability issues.

Trying to obtain retroactive approval would not fix the absence of authority; it would still be spending without proper authorization. Reclassifying the expenditure doesn’t create the necessary legal basis either. If affirmative authority isn’t in place, pause and obtain the proper authorization before moving forward.