A fully updated 2026 L4M4 Exam Dumps exam guide from training expert ExamDiscuss
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NEW QUESTION # 71
What course of action should be taken when an audit of a supplier identifies evidence of human rights malpractice?
- A. Immediately halt all orders and switch to an alternative source of supply
- B. Remove all business and inform press organisations to escalate to government authorities
- C. Allow the supplier to complete current orders while pursuing alternatives
- D. Immediately raise the issue with the supplier and jointly develop a timely action plan before a repeat audit
Answer: D
Explanation:
CIPS promotes a constructive and corrective approach when suppliers fall short of ethical standards, especially on critical issues like human rights. Immediately cutting ties can harm workers further and disrupt supply without addressing root causes. A responsible sourcing approach requires buyers to engage suppliers, escalate the concern, and establish a corrective action plan with monitoring to ensure compliance. Only if the supplier refuses to act or breaches persist should termination occur. This supports continuous improvement, supplier development, and ethical due diligence, reflecting global standards such as the UN Guiding Principles on Business and Human Rights.
Reference: CIPS L4M4 Study Guide (v2), LO: "Implementation" - audits, corrective action plans, ethical risk management.
NEW QUESTION # 72
In which type of market would you be most likely to find a 'perfect competition'?
- A. commodity
- B. monopolistic competition
- C. monopoly
- D. oligopoly
Answer: D
Explanation:
An oligopoly. Perfect competition is a situation in a marketplace where there is plenty of competition. A monopoly or monopolistic competition would have 'imperfect competition'
NEW QUESTION # 73
If a company is concerned with ethical sourcing and has concerns about issues such as corruption and modern day slavery within the supply chain, what course of action should they take?
- A. Complete formal tenders to find the best suppliers
- B. Only work with known suppliers
- C. Complete Due-Diligence on all new suppliers
- D. Only work with suppliers who have a published Anti-Slavery policy
Answer: C
Explanation:
Completing Due Diligence checks will help guard against concerns about unethical business practices.
Not all companies will have a published Anti-Slavery policy- this is only required for large companies.
Known suppliers might have issues that you don't know about so you should always do due-diligence checks on everyone you work with Formal tenders won't sort out ethical issues unless specifically addressed within the tender and strong contract management is put in place afterwards.
NEW QUESTION # 74
Robert is appraising suppliers and is keen to evaluate suppliers' contribution to the community and the environment. Which of the following should Robert look at?
- A. ESG Policy
- B. ISO9001
- C. Anti-Slavery Policy
- D. ISO27000
Answer: A
Explanation:
Robert should look at the supplier's ESG policy. This stands for Environmental Social Governance. So covers both his requirements for community (social) and environmental factors.
ISO 9001 is about Quality Management and ISO27000 about Information Security so these are in-correct answers. An Anti-Slavery Policy would not discuss the environment.
NEW QUESTION # 75
A procurement manager has a new contract to award. There are twelve suppliers in the market. Which of the following is a benefit of using a full competitive tendering process?
- A. Only the procurement manager can decide who wins
- B. All suppliers will know how much the others have bid
- C. It is a quick and informal process
- D. All bidders will be treated equally
Answer: D
Explanation:
A full competitive tender ensures fairness, transparency, and equal treatment of all suppliers. Each bidder has an equal opportunity to compete, and award decisions are based on pre-published criteria. This builds trust, prevents corruption, and strengthens market confidence. It is not quick or informal (A), nor does it disclose competitor bids (B). Decision-making is collective and accountable, not unilateral (D). Responsible sourcing stresses fairness and transparency in supplier engagement, ensuring a level playing field and compliance with ethical procurement standards.
Reference: CIPS L4M4 Study Guide (v2), LO: "Implementation" - tendering principles and fairness.
NEW QUESTION # 76
Avram is a buyer for a private sector electrical components company and is promoting the advantages of competitive bidding.
When is competitive bidding appropriate?
Select TWO that apply.
- A. When there is sufficient time to conduct the procedure
- B. When it is impossible to estimate production costs accurately
- C. When price is not the most important award criterion
- D. When there are adequate numbers of potential suppliers in the market
- E. When changes to the specification are likely as the contract progresses
Answer: A,D
Explanation:
Competitive bidding is most appropriate when there is asufficient number of capable suppliersto create genuine competition and whenadequate timeis available to conduct the process fairly and transparently.
These conditions allow suppliers to prepare robust bids and enable buyers to evaluate proposals properly.
Competitive bidding is less suitable where specifications are unstable or urgent decisions are required. Ethical and responsible sourcing emphasises proportionality and fairness, ensuring competition is used where it adds value and does not compromise delivery, governance, or stakeholder needs.
Reference:CIPS L4M4 Ethical & Responsible Sourcing Study Guide (v2) - competitive tendering; appropriateness of sourcing routes.
NEW QUESTION # 77
A buyer evaluates a supplier's ethical and social practices during the pre-qualification stage of the supplier onboarding process. Which of the following variables would trigger further follow-up activities?
- A. On discovering that no employees can work without agreeing to the buyer organisation's code of conduct
- B. If the supplier's employees have a good understanding of their employment rights
- C. On discovering that trade (labour) union memberships are not permitted by the supplier in its place of work
- D. When staff are unionised and appropriate time is provided for union activities
Answer: C
Explanation:
Prohibiting trade union membership is a violation of workers' rights and international labor standards. Such a practice indicates potential non-compliance with ethical sourcing principles and necessitates further investigation. Ensuring that suppliers respect workers' rights to association is fundamental to ethical procurement.
Reference:
CIPS Level 4 Diploma in Procurement and Supply, L4M4 Study Guide, Section 3.3.1:Application of the CIPS Code of Conduct
NEW QUESTION # 78
A balance sheet will show a company's assets, liabilities and shareholder equity. What is share-holder equity?
- A. the profit from sales once tax has been deducted
- B. the amount of money held in the company's bank account
- C. the owners' residual claim once all debt has been paid
- D. the amount of money from retained earnings
Answer: C
Explanation:
shareholder equity = the owner/s of the organisation's residual claim once all debts have been paid. What Is Shareholder Equity (SE) and How Is It Calculated? (investopedia.com)
NEW QUESTION # 79
Rules regulating the type of goods and the volume that can be imported into a country or trade block are commonly known as what?
- A. duties
- B. profits
- C. tariffs
- D. laws
Answer: D
Explanation:
This is tariffs. Be careful not to confuse tariffs and duties;
tariffs = rules and duties = payments.
NEW QUESTION # 80
What type of ratio is used to measure a company's ability to meet its short-term financial obligations, specifically focusing on its ability to convert assets into cash to cover current liabilities?
- A. Liquidity ratio
- B. Profitability ratio
- C. Earnings per share
- D. Dividend per share
Answer: A
Explanation:
Liquidity ratios, such as the current and quick ratios, evaluate a company's ability to meet short-term liabilities with current assets. This metric is crucial for assessing a supplier's financial stability, ensuring continuity and reliability in the supply chain, which aligns with ethical and responsible sourcing principles.
NEW QUESTION # 81
If a company is described as 'liquid' what does this mean?
- A. the company spends a lot of money
- B. the company has enough money to pay short-term liabilities
- C. the company is highly profitable
- D. the company is funded on equity rather than debt
Answer: B
Explanation:
liquid = the ability to pay short and medium term debts. In simple terms do you have more in stuff (money, assets) than you owe in debt?
Understanding Liquidity and How to Measure It (investopedia.com)
This is a hot topic for the exam. Learn everything in this section.
NEW QUESTION # 82
What might a buyer encounter if the supplier's government has introduced a protectionist measure?
- A. Arbitration
- B. Inward processing relief
- C. Import duties
- D. Carnets
Answer: C
Explanation:
Protectionist measures are policies implemented by governments to protect domestic industries from foreign competition. One common protectionist measure is the imposition of import duties, which are taxes levied on imported goods. These duties make imported products more expensive, encouraging consumers to buy domestic products instead. Buyers sourcing internationally must be aware of such duties as they directly impact the total cost of procurement.
Exact Extract from Study Guide:
"Furthermore, there are many potential cost considerations when importing goods which can include taxes & duties or storage costs. By understanding all key legal, regulatory and organizational requirements prior to sourcing from international suppliers, businesses can ensure compliance while also maximizing cost savings."
NEW QUESTION # 83
Why is it important to consider factors such as environmental, social, governance, and ethics (ESG) when analysing tenders?
* To ensure adherence to sustainability initiatives
* To improve process workflow
* To perform supplier spend and monitoring
* To identify potential risks within the supply chain
- A. 1 and 2 only
- B. 3 and 4 only
- C. 2 and 3 only
- D. 1 and 4 only
Answer: D
Explanation:
Including ESG criteria in tender analysis helps ensure suppliers align with the buyer's sustainability initiatives (1) and helps identify risks within the supply chain (4), such as unethical labour practices or environmental harm. Improving workflow (2) and spend monitoring (3) are operational concerns but not ESG drivers.
Responsible sourcing requires procurement professionals to integrate ESG into decision-making, ensuring not only cost-efficiency but also ethical compliance, resilience, and long-term value. This reflects the growing importance of corporate social responsibility (CSR) and stakeholder expectations.
Reference: CIPS L4M4 Study Guide (v2), LO: "Concepts" - ESG in sourcing decisions.
NEW QUESTION # 84
Economic indices track a market's stability and health. One of these indices is the Consumer Price Index (CPI). Which of the following are aspects of the Consumer Price Index? Select TWO that apply.
- A. The CPI tracks the performance of selected companies in different stock markets
- B. The CPI shows that prices are influenced by tax thresholds rates rather than inflation rates
- C. The CPI tracks variations in prices in a particular geographical location
- D. The CPI tracks the weighted average prices of selected commodities within the country
- E. The CPI helps in calculating the exchange rates and tariffs used in setting prices for imports
Answer: C,D
Explanation:
The Consumer Price Index (CPI) measures the average change over time in the prices paid by consumers for a market basket of goods and services. It reflects price variations in specific geographical locations and tracks the weighted average prices of selected commodities, providing insights into inflation and cost of living.
Exact Extract from Study Guide:
"The Consumer Price Index (CPI) tracks variations in prices for a range of consumer goods and services over time, in a particular geographic location."
NEW QUESTION # 85
Sourcing can be tactical or strategic. Which of the following might be classified withinstrategic sourcing?
* Stakeholder meetings to review product design modifications
* Open tendering to provide new office chairs
* Evaluating quotations for the latest accounting software
* Regular stationery orders for the managing director's office
- A. 1 and 2 only
- B. 2 and 3 only
- C. 1 and 3 only
- D. 2 and 4 only
Answer: C
Explanation:
Strategic sourcing focuses onlong-term value creation, alignment with organisational objectives, and cross- functional stakeholder involvement. Reviewing product design modifications with stakeholders directly influences cost, sustainability, quality, and supply risk over the product lifecycle. Similarly, evaluating quotations for major systems such as accounting software represents a high-value, long-term sourcing decision with strategic impact. In contrast, sourcing office chairs and routine stationery purchases are low- value, repetitive activities and are therefore classified as tactical sourcing. Ethical and responsible sourcing requires procurement professionals to prioritise strategic activities that affect long-term performance, risk management, and sustainability outcomes.
Reference:CIPS L4M4 Ethical & Responsible Sourcing Study Guide (v2) - Tactical vs strategic sourcing; stakeholder engagement.
NEW QUESTION # 86
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