CIPS L4M4 Exam Questions Instant Access - No Installation Required

Question 1

Which of the following can be undertaken by the buyer in relation to the governance of a supplier's ethical and sustainable behaviours?

Review the insurance clauses in the contract

Check that the supplier's internal policies are up to date

Check the supplier's conflict of interest register for their contract

Review the non-disclosure agreement for their contract

A2 and 3 only

B1 and 3 only

C1 and 4 only

D2 and 4 only

Answer : B

Governance of ethical and sustainable behaviours involves monitoring risk coverage and transparency measures. Reviewing insurance clauses (1) ensures suppliers are prepared to cover liabilities responsibly. Checking conflict of interest registers (3) promotes transparency, reducing risks of corruption or unfair influence. Simply reviewing NDAs (4) or updated policies (2) does not provide direct assurance of ethical and sustainable practices. Responsible sourcing requires robust governance mechanisms that ensure supplier compliance, reduce risk, and maintain ethical integrity across the supply chain.

Question 2

You have been asked to purchase 500 pens of a specific brand. You decided to use a weighted points system for assessment of proposals. Is this approach appropriate?

AYes, a weighted points system is always the best way to evaluate bids

BNo, it is not necessary as in this case, you are mainly concerned with price

CYes, you should follow the same procurement process irrespective of the circumstances

DNo, you should only use a weighted points system for high-spend procurement

Answer : B

Weighted points systems are appropriate for complex or high-value purchases where multiple factors (e.g., quality, sustainability, delivery) must be balanced. For simple, low-value purchases like pens, price is typically the only differentiating factor. Using a weighted points system would overcomplicate the process, wasting resources. Responsible sourcing requires proportionality --- applying robust evaluation methods where justified, while keeping processes simple and efficient for routine purchases. This ensures efficiency without compromising governance, freeing procurement resources for strategic projects.

Question 3

Which of the following is an example of intracompany trading? Select TWO

Aa manufacturer in the UK buys raw copper from a supplier in Chile

Btwo companies owned by the same entity conduct business

Ctwo companies join together to create a new product

Dtwo departments within the same company collaborate on a project

Ecleverness

Answer : B, D

Intracompany trading is when two departments in the same company do trading. AND when two companies owned by the same parent company do trading.

INTRA means 'within' - so it's doing business with yourself.

Question 4

Which of the following is a measure of liquidity?

AGearing

BReturn on Investment

CCurrent Ratio

DTotal Asset Turnover

Answer : C

Liquidity measures a company's ability to meet short-term obligations. The current ratio = current assets current liabilities, indicating whether the business can cover debts due within one year. Ratios above 1 suggest healthy liquidity, though excessively high ratios may show underutilised cash. Gearing reflects debt-to-equity (solvency); ROI assesses profitability; total asset turnover measures efficiency. Responsible sourcing requires buyers to evaluate liquidity to ensure suppliers have the working capital to maintain operations and deliver reliably. Poor liquidity is a red flag for potential supply disruption.

Question 5

A buyer of bakery and cereal products is tracking wheat prices. Severe weather causes crop failure in a major wheat-producing country, creating global shortage while demand remains high. How can this research help the buyer?

ABakery produce is likely to be at a lower price as there is less availability of wheat flour in the market

BThe price for wheat-based produce will not be affected by the global shortages as demand is still high

CThe buyer will find it difficult to negotiate a lower price for products containing wheat-based ingredients

DThe buyer will be in a strong bargaining position to reduce the price of wheat-based food items

Answer : C

In situations of global commodity shortages, basic supply-and-demand principles mean that prices increase when demand remains constant or high. This reduces the buyer's bargaining power, making it difficult to negotiate lower prices (C). Instead, suppliers are likely to increase costs due to scarcity. Options A and D are incorrect because reduced availability drives prices up, not down. Option B is misleading --- prices are affected by shortages. Responsible sourcing requires procurement professionals to anticipate such volatility through market intelligence, consider alternative supply sources, or explore hedging/forward contracts to mitigate risks.

Question 6

A buyer might opt to do an 'Invitation to Tender' rather than a 'Request for Quotation' process because ...

AThe supplier market is an oligopoly where there are a few large suppliers dominating the market

BTime is of the essence, and decisions need to be made quickly without additional stakeholder involvement

CThe contract will be low value and there are many suppliers, so a simpler approach is required

DThe nature of the goods or services being purchased is complex and high value

Answer : D

An Invitation to Tender (ITT) is typically used for complex, high-value procurements where the quality and specific features of the goods or services are of paramount importance. This approach ensures that ethical and responsible sourcing criteria are met, aligning with best practices in procuring specialised goods or services.

Question 7

A buyer is carrying out an assessment to identify the risk of unethical suppliers being selected for a new contract. Which of the following should the assessment include in order to protect the organisation against ethical reputational risks?

AThe average staff retention levels experienced by the suppliers

BWhether the suppliers have received negative press around their fair treatment of subcontracted staff

CThe likelihood of suppliers becoming insolvent in the future due to unforeseen circumstances

DPerformance records (late deliveries/poor quality) of agreed contract deliverables

Answer : B

Assessing the ethical reputation of suppliers is crucial to mitigate risks associated with unethical practices. Negative media coverage regarding the fair treatment of subcontracted staff is a significant indicator of potential ethical issues within a supplier's operations. Such information can highlight concerns related to labor rights violations, discrimination, or unsafe working conditions, which can adversely affect the buying organization's reputation if not addressed.

CIPS Level 4 Diploma in Procurement and Supply, L4M4 Study Guide, Section 3.3.1: Application of the CIPS Code of Conduct

CIPS Ethical and Responsible Sourcing L4M4 Exam Questions