CIPS L5M5 Exam Practice Test Instant Access

Question 1

When creating a Sustainable Procurement Policy, which of the following steps should be conducted first?

AGather information

BDraft the policy

CIdentify who will take lead responsibility

DConsult with stakeholders

Answer : C

Comprehensive and Detailed Explanation From Exact Extract of Documents:

The L5M5 study guide (p.33) outlines nine steps to creating a Sustainable Procurement Policy. The very first step is to identify who will take lead responsibility (C). This ensures accountability from the outset. Once a leader is appointed, the next steps include gathering information, drafting the policy, consulting with stakeholders, obtaining approval, and monitoring. Without clear leadership, policies risk being ineffective. Procurement professionals must ensure accountability and leadership to drive sustainability objectives effectively.

Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.33

Question 2

Which of the following standards is applicable to governments rather than private businesses?

AUN Global Compact

BILO Fundamental Principles of Human Rights

CSA8000

DOECD Guidelines for MNEs

Answer : B

Comprehensive and Detailed Explanation From Exact Extract of Documents:

The ILO Fundamental Principles of Human Rights apply to governments, as ILO conventions must be ratified and enforced at the national level. The L5M5 study guide (p.271) contrasts this with frameworks aimed at businesses: UN Global Compact (A), SA8000 (C), and OECD Guidelines for Multinational Enterprises (D). Governments are responsible for implementing and enforcing ILO standards, while businesses align with other voluntary or certification frameworks. Procurement professionals must understand which standards apply to suppliers and which are obligations for governments when working internationally.

Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.271

Question 3

Freedom Incorporated, a UK company, buys vehicles from South Kore

a. Which of the following are included in Total Landing Costs? Select THREE

ACost of motor insurance

BDelivery cost

CCurrency conversion costs

DDisposal costs

EImport duties

Answer : B, C, E

Comprehensive and Detailed Explanation From Exact Extract of Documents:

Total Landing Costs include all costs incurred to bring goods to the buyer's location. According to the L5M5 study guide (old p.81, new p.107), these include delivery costs (B), currency conversion costs (C), and import duties (E). Motor insurance (A) and disposal costs (D) are post-delivery expenses and not part of landing costs. Procurement professionals must calculate total landing costs to make accurate sourcing decisions and avoid hidden expenses that can erode cost savings from international procurement.

Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.107

Question 4

Which of the following is a disadvantage of Low-Cost Country Sourcing (LCCS)? Select THREE

ALow infrastructure costs

BScalability of production

CInventory risks

DDifferent laws and regulations

ECurrency fluctuations

Answer : C, D, E

Comprehensive and Detailed Explanation From Exact Extract of Documents:

While LCCS can reduce costs, it also presents risks. The L5M5 study guide (p.72) identifies disadvantages such as inventory risks (C) from longer lead times, different laws and regulations (D) creating compliance challenges, and currency fluctuations (E) impacting costs unpredictably. Low infrastructure costs (A) and scalability of production (B) are advantages, not disadvantages. Procurement professionals must weigh cost savings against these risks and implement mitigation strategies such as dual sourcing and currency hedging.

Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.72

Question 5

The unethical practice of using information that is not publicly available to trade on the stock market is commonly known as what?

ABribery

BKickback

CInsider trading

DGreasing the wheels

Answer : C

Comprehensive and Detailed Explanation From Exact Extract of Documents:

Insider trading occurs when individuals use confidential or non-public information to gain an unfair advantage in stock market trading. The L5M5 study guide (p.3) identifies insider trading as an example of unethical business behaviour. It is illegal in most jurisdictions because it undermines market fairness and investor confidence. Bribery (A) and kickbacks (B) involve corrupt practices in procurement, while 'greasing the wheels' (D) refers to facilitation payments. Procurement professionals must avoid insider trading directly and indirectly (e.g., suppliers disclosing confidential financial information) to maintain ethical compliance and governance.

Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.3

Question 6

What does the ''D'' stand for in STEEPLED Analysis?

AData

BDebt

CDemographic

DDelivery

Answer : C

Comprehensive and Detailed Explanation From Exact Extract of Documents:

The STEEPLED analysis tool examines external macro-environmental factors: Social, Technological, Economic, Environmental, Political, Legal, Ethical, and Demographic. The L5M5 study guide (p.55) confirms that ''D'' stands for Demographic, reflecting population trends, age structures, and workforce availability. This addition evolved from the earlier PESTLE model, later extended to STEEPLE and STEEPLED. Procurement professionals use this tool to assess external risks and opportunities that may affect supply markets and ethical sourcing.

Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.55

Question 7

SA8000 measures an organisation's social accountability. Which of the following is a disadvantage of this standard?

AIt is industry specific

BIt is not recognised in some countries

CIt requires a management system which can be costly to implement

DIt is only applicable to larger organisations

Answer : C

Comprehensive and Detailed Explanation From Exact Extract of Documents:

SA8000 is an internationally recognised certification standard for social accountability. It requires organisations to adopt management systems to monitor compliance with social standards, including child labour elimination, safe working conditions, and fair wages. According to the L5M5 study guide (p.264), one disadvantage is the cost of implementing and maintaining the management system, which can be resource-intensive for smaller organisations. SA8000 is not industry-specific, is recognised globally, and is applicable to both large and small organisations. However, the investment in audits, training, and compliance documentation can be significant, making this a barrier for some companies.

Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.264

CIPS Managing Ethical Procurement and Supply L5M5 Exam Practice Test