CIPS L4M4 Exam Practice Test Instant Access

Question 1

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 2

How can a buyer monitor a supplier's ethical workforce standards throughout a long-term contract?

ACheck the International Labour Organisation's database regularly for information specifically about that supplier

BRequest a completed self-assessment by the supplier on a monthly basis

CCommission periodic audits by specialist third parties to highlight any malpractice

DContact management directly on a periodic basis, as stipulated in contract terms

Answer : C

Conducting periodic audits by third-party specialists is a reliable way to monitor compliance with ethical standards, as these audits provide an objective assessment. This aligns with ethical sourcing practices, as it promotes accountability and ensures continuous adherence to agreed-upon standards.

Question 3

The procurement manager has received the following data from the supplier's accounts to facilitate the calculation of the supplier's current ratio:

Current Assets: Stock $200; Debtors $60; Cash $40; Total $300

Short Term Liabilities: Bank overdraft $150

Which calculation will the procurement manager use to find out the current ratio?

A300200150300 200 150300200150

B300150300 150300150

C(300150)100(300 - 150) 100(300150)100

D(300200150)100(300 - 200 - 150) 100(300200150)100

Answer : B

The current ratio is calculated by dividing total current assets by total current liabilities. Here, dividing $300 by $150 gives a current ratio of 2.0, indicating that the supplier has adequate current assets to cover its short-term obligations, an important factor in supplier evaluation.

Question 4

Ramesh is an IT category manager within the UK's National Health Service and is responsible for the procurement of a new high-value network system, which will spread across multiple doctors' practices and community health centres. Ramesh has reviewed different tender approaches and concluded that the use of a restricted tender is the most appropriate. Which of the following statements is true for a restricted tender process?

ADirect negotiations occur prior to suppliers submitting their offer

BThe contract will be awarded strictly on pricing criteria

CSuppliers responding to the tender are pre-qualified

DIt is only relevant when there are few suppliers in the market

Answer : C

In a restricted tender process, only pre-qualified suppliers are invited to bid, ensuring that participating suppliers have met necessary qualifications. This approach helps in managing high-value contracts by focusing on capable suppliers. Ethical and responsible sourcing in the public sector demands supplier pre-qualification to ensure compliance, transparency, and quality.

Question 5

Added value can be objectively defined. Is this sentence TRUE?

AYes- added value should be assessed along with price

BYes- added value is the same for all organisations

Cno - added value may change from one company to another

Dno- added value is always intangible

Answer : C

The correct answer is 'no - added value may change from one company to another'.

Added value is very subjective. What one person thinks is excellent added value, another may not rate highly. For example one buyer may consider a supplier having good brand reputation as added value, but another might not care.

The other no answer is incorrect because added value can be tangible or intangible. Tangible means you can touch and see it and intangible means you can't.

Question 6

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

A1 and 3 only

B1 and 4 only

C2 and 3 only

D2 and 4 only

Answer : C

Regularly checking supplier policies and conflict of interest registers helps ensure that suppliers are upholding ethical standards, which supports responsible sourcing practices. This governance activity aligns with ethical guidelines to promote transparency and prevent conflicts that could affect the integrity of the supply chain.

Question 7

An organisation wants to measure its Triple Bottom Line. Which of the following should be considered to help achieve this goal?

AQuality and lead time and performance

BInnovation and creativity performance

CFinancial and environmental performance

DProcedure and process performance

Answer : C

The Triple Bottom Line framework evaluates an organisation's impact on social, environmental, and economic factors. Financial and environmental performance are critical components, along with social metrics, aligning with responsible sourcing goals to promote sustainability and ethical practices.

CIPS L4M4 Ethical and Responsible Sourcing Exam Practice Test