[Aug 31, 2026] Latest L4M4 Exam with Accurate Ethical and Responsible Sourcing PDF Questions
Practice To L4M4 - PassReview Remarkable Practice On your Ethical and Responsible Sourcing Exam
CIPS L4M4 Exam Syllabus Topics:
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NEW QUESTION # 166
Which of the following should be conducted during the analysis of tender responses?
* Produce a report on each submission
* Review the pre-qualification questionnaire
* Check the arithmetical accuracy of each tender
* Evaluate the market dynamics
- A. 2 and 3 only
- B. 3 and 4 only
- C. 1 and 2 only
- D. 1 and 3 only
Answer: D
Explanation:
During tender evaluation, buyers must ensure that each submission is analysed thoroughly and consistently.
Producing a report on each submission (1) supports transparency, auditability, and fairness. Checking arithmetical accuracy (3) ensures that pricing data is correct and prevents calculation errors from misleading the evaluation. Reviewing pre-qualification questionnaires is part of the earlier stage, not tender analysis, while market dynamics are external context, not part of evaluating responses. Responsible sourcing highlights the importance of structured and auditable evaluation processes to protect against bias, ensure compliance, and provide stakeholders with a defendable record of decisions.
Reference: CIPS L4M4 Study Guide (v2), LO: "Implementation" - tender evaluation and analysis procedures.
NEW QUESTION # 167
Why is it important, when awarding high-value contracts, for a buyer to conduct a financial assessment of a supplier?
- A. Financial assessments provide a holistic view of a company's capability including quality and delivery performance
- B. The buyer must ensure continuity of supply because financial problems of a supplier could affect the supply
- C. If a supplier has a high credit score this means it pays its own suppliers late which could result in stock outs
- D. A supplier who is highly profitable will be charging prices higher than the average market rate
Answer: B
Explanation:
Financial stability is a critical risk factor in high-value contracts. If a supplier collapses financially during contract performance, the buying organisation faces supply disruption, increased costs, and reputational risk.
Financial assessments help identify vulnerabilities such as high debt, poor liquidity, or over-reliance on limited customers. While profitability, credit scores, and broader capability assessments are useful, the most pressing concern is ensuring continuity of supply. Ethical and responsible sourcing requires buyers to consider the long-term viability of suppliers, not just short-term savings. This aligns with responsible practice, protecting stakeholders, end customers, and the organisation's own obligations.
Reference: CIPS L4M4 Study Guide (v2), LO: "Implications" - supplier financial health, continuity of supply.
NEW QUESTION # 168
Polygon Incorporated is a new company in the mining industry, which often gets bad press due to issues of sustainability. Which of the following should Polygon Incorporated consider when developing sustainable business practices?
- A. fraud, bribery and corruption
- B. people, profit, planet
- C. efficiency, effectiveness, impact
- D. economic, ethical and environmental
Answer: B
Explanation:
The three pillars of sustainability are profit, people and planet. This may also be referred to as social, economic and environmental.
NEW QUESTION # 169
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?
- A. (300#200#150)×100(300 - 200 - 150) × 100(300#200#150)×100
- B. (300#150)×100(300 - 150) × 100(300#150)×100
- C. 300÷150300 ÷ 150300÷150
- D. 300÷200×150300 ÷ 200 × 150300÷200×150
Answer: C
Explanation:
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.
NEW QUESTION # 170
Philip is a procurement manager at XYZ Company which imports raw materials from abroad. Sup-pliers provide quotes to Philip in their local currency. Is this the best way to reduce the risk to XYZ Company of currency fluctuations?
- A. yes- this puts the risk on the supplier
- B. no- quoting in the supplier's currency does not affect the risk to the buying organisation
- C. yes- this means the price won't go up or down
- D. no- quoting in the supplier's currency increases the risk for the buyer
Answer: D
Explanation:
The correct answer is 'no- quoting in the supplier's currency increases the risk for the buyer'. This questions comes up in a variety of formats in the exam. Remember; if the price is in your own currency (most examples in the exam are given in £) there is less risk than if the prices are quoted in a foreign currency. This is because exchange rates fluctuate; if the price is in £ you always know what you're paying, if it's in another currency the price can change daily depending on if the exchange rate compared to £ has gone up or down.
NEW QUESTION # 171
Which award criteria can be applied when sourcing requirements from external suppliers?
- A. Delivery promises of goods
- B. Price and total life-cycle costs
- C. Plans and manpower numbers
- D. Understanding of supplier operations
Answer: B
Explanation:
Responsible award decisions should consider price and total life-cycle cost (TCO) to capture acquisition, operation, maintenance, and end-of-life costs, aligning with sustainability. Other items may inform due diligence but are not, by themselves, robust award criteria without being translated into measurable value and risk outcomes.
Reference: CIPS L4M4 Study Guide (v2): LO "Implementation" - evaluation and award; TCO and sustainability in criteria setting.
NEW QUESTION # 172
During which stage of the procurement cycle would you remove suppliers that do not add value, or could pose a risk to the buying organisation?
- A. supplier selection
- B. contract award
- C. develop strategy
- D. asset management
Answer: A
Explanation:
At supplier selection stage, unsuitable suppliers should be removed (those that do not add value or pose a risk). At develop strategy stage you're not even looking at suppliers yet- you're just deciding what you need.
At contract award and asset management it's too late.
CIPS procurement cycle - Procurement Supply Cycle | CIPS
NEW QUESTION # 173
Incoterms are divided into four main groups to follow movement of goods covering exporter's premises, export/import points, and cost/risk. Which letters represent the groups?
- A. E, F, B, C
- B. A, B, C, D
- C. B, C, F, C
- D. E, F, C, D
Answer: D
Explanation:
Incoterms are grouped into four categories:
* E: Departure (EXW)
* F: Main carriage unpaid (FCA, FAS, FOB)
* C: Main carriage paid (CFR, CIF, CPT, CIP)
Reference: CIPS L4M4 Study Guide (v2), LO: "Application" - Incoterms groupings and risk allocation.
NEW QUESTION # 174
Achieving the 'five rights of procurement' is one of the key objectives of procurement managers. Which of the following are not considered one of the 5 rights? Select TWO.
- A. ethics
- B. quantity
- C. environment
- D. time
- E. quality
Answer: A,C
Explanation:
ethics and environment are not a 'right of procurement'.
The 5 rights are price, quality, quantity, time and place.
NEW QUESTION # 175
A 'carnet' provides evidence of the origin of goods shipped in an international trade transaction. Is this statement correct?
- A. It is a widely used import document that confirms the origin of goods
- B. Yes, it is only used when exporting goods from Europe and confirms the country of origin
- C. No, it is a type of insurance cover to protect against loss of goods in transit
- D. No, it is a document that allows the temporary free movement of goods
Answer: D
Explanation:
A carnet (specifically an ATA Carnet) is a customs document that allows for the temporary duty-free and tax- free movement of goods across international borders. It is commonly used for exhibitions, fairs, and professional equipment but is not proof of origin. Proof of origin is instead provided by a certificate of origin or other trade documents. It is also not an insurance policy. Responsible sourcing requires buyers to distinguish between documents used for temporary movement (carnet), origin evidence (certificate of origin), and risk transfer (insurance). Correct understanding avoids compliance failures, delays, or unexpected costs in international trade.
Reference: CIPS L4M4 Study Guide (v2), LO: "Application" - international sourcing documentation.
NEW QUESTION # 176
Which of the following is not a indices that measures economic data?
- A. GDP
- B. PPI
- C. CPI
- D. ISO
Answer: D
Explanation:
ISO isn't an indices- it stands for 'International Labour Association'.
The others are all indices that measure economic data; consumer price index, producer price index and gross domestic product.
NEW QUESTION # 177
What course of action should be taken when an audit of a supplier identifies evidence of human rights malpractice?
- A. Immediately raise the issue with the supplier and jointly develop a timely action plan to be implemented before a repeat audit
- B. Allow the supplier to complete current orders placed, while pursuing an alternative source to change to as soon as approved
- C. Immediately halt all orders with the supplier, make a record of the violation in the supplier database, and switch to an alternative source of supply
- D. Remove all business and inform press organisations, who will in turn bring the issue to the attention of formal governmental organisations who can take action
Answer: A
Explanation:
Addressing human rights issues collaboratively by developing an action plan allows for improvement and correction. This approach is consistent with ethical sourcing principles, which encourage responsible intervention to correct and improve supply chain practices rather than punitive measures that may not lead to long-term change.
NEW QUESTION # 178
Ji Yuan is a procurement manager who is looking for a new supplier to complete reactive maintenance activities throughout his property portfolio. The reactive maintenance will include an array of plumbing tasks as well as fixing electrical items. Suppliers therefore need to be extremely skilled and knowledgeable about a variety of tasks. Ji Yuan has done some initial research and doesn't believe that there are many suppliers who can complete this type of contract. What type of tender should he use?
- A. negotiated
- B. open
- C. competitive dialogue
- D. restricted
Answer: B
Explanation:
Open tenders should be used when the buyer expects there to be little interest / fewer bids. The opportunity is advertised widely allowing any supplier that wishes to submit a bid the opportunity.
The other options limit the number of suppliers and Ji Yuan doesn't want to do that, because he risks getting no interest and no supplier.
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NEW QUESTION # 179
Which financial statement would be used for analysing an organisation's assets?
- A. Cash flow statement
- B. Profit and loss account (statement of financial performance)
- C. Balance sheet (statement of financial position)
- D. Credit rating reports
Answer: C
Explanation:
Thebalance sheet, also known as the statement of financial position, provides a snapshot of an organisation's assets, liabilities, and equityat a specific point in time. It is the primary financial statement used to analyse what an organisation owns and owes. The profit and loss account focuses on income and expenses, while the cash flow statement shows cash movements. Credit rating reports summarise financial risk but are not financial statements. Ethical and responsible sourcing requires procurement professionals to understand balance sheets to assess supplier stability and reduce supply continuity risks.
Reference:CIPS L4M4 Ethical & Responsible Sourcing Study Guide (v2) - financial statements and supplier assessment.
NEW QUESTION # 180
Each stage of the tendering procedure requires a timeline to be met by bidders and the tender processing team.
Which of the following explains why timescales are important in the tendering process?
* They help in getting the right lead-time on the purchase order
* They separate the quickest bidders from the slowest
* They ensure that all bidders are treated equally
* They ensure that bids are submitted in the correct format
- A. 2 and 3 only
- B. 2 and 4 only
- C. 1 and 2 only
- D. 1 and 3 only
Answer: D
Explanation:
Clearly defined timescales are essential to ensurefairness and consistencyin the tendering process. They help buyers plan appropriatelead-times for purchase orders (1)and ensure thatall bidders are treated equally (3) by being given the same deadlines. Timescales are not intended to rank bidders by speed, nor do they ensure correct bid formatting. Ethical and responsible sourcing places strong emphasis on transparency and equal treatment, particularly in competitive tendering, ensuring no supplier gains an unfair advantage due to ambiguous or inconsistent deadlines.
Reference:CIPS L4M4 Ethical & Responsible Sourcing Study Guide (v2) - tendering procedures; fairness and transparency.
NEW QUESTION # 181
Which of the following is true for CIPS members who sign and comply with the CIPS Code of Conduct?
Members can ...
* gain an understanding of ethical and successful business operations
* acquire automatic entitlement to government sponsorship
* enjoy continued CIPS membership and access to resources
* bypass the need to comply with other voluntary or legal codes
- A. 2 and 3
- B. 1 and 2
- C. 1 and 3
- D. 1 and 4
Answer: C
Explanation:
CIPS members who adhere to the CIPS Code of Conduct gain insight into ethical business practices and retain their membership and access to CIPS resources. This commitment to ethical standards supports responsible sourcing by fostering a community of professionals who value integrity and best practices.
NEW QUESTION # 182
'Phishing' is an activity that can occur when an employee within an organisation receives an email that appears to be from a genuine supplier but is false. These types of emails expose the organisation to the activities of expert cyber criminals. Which type of crime category does this activity fall within?
- A. Fraud
- B. Bribery
- C. Human rights
- D. Corruption
Answer: A
Explanation:
Phishing is categorized as fraud because it involves deceptive practices to gain sensitive information or financial benefits. Responsible sourcing includes ensuring that cybersecurity measures are in place to prevent fraud and protect sensitive information within supply chains.
NEW QUESTION # 183
The Universal Declaration of Human Rights means that member states cannot restrict their citizens of any of the rights listed. Which of the following rights may apply to employees who make a complaint about unfair pay and conditions that are not comparable to others in the company?
- A. The right to freedom
- B. The right to beliefs
- C. The right to be treated equally
- D. The right to free speech and expression
Answer: C
Explanation:
The Universal Declaration of Human Rights (UDHR) Article 23(2) states that "Everyone, without any discrimination, has the right to equal pay for equal work." This underscores the principle of equality in the workplace, ensuring that employees are treated equally regarding pay and conditions. Therefore, employees raising concerns about unfair pay compared to their colleagues are exercising their right to be treated equally.
Reference:
Universal Declaration of Human Rights, Article 23(2):
NEW QUESTION # 184
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