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CIPS Level 4 Diploma in Procurement and Supply L4M4 Exam and Certification Test Engine
CIPS L4M4 Exam Syllabus Topics:
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NEW QUESTION # 60
Which of the following is a UK legislation concerning product safety?
- A. GDPR 2018
- B. Competition Act 1998
- C. Consumer Rights Act 2015
- D. Enterprise Act 2002
Answer: C
Explanation:
The Consumer Rights Act 2015 is about product safety and making sure products sold on the market are fit for purpose. It gives buyers rights and protections. The Consumer Rights Act 2015 - Citizens Advice There's a long list of legislation on p.105. I wouldn't worry about memorizing them all but just have an idea of what legislation relates to what area. E.g. GDPR is about Data Protection and the Com-petitions Act is about Marketplace competition. Most of them are quite obvious from the name.
NEW QUESTION # 61
The balance sheet (statement of financial position) is one of the financial statements used in assessing a supplier's financial stability. The balance sheet contains information on such items as ...
- A. Liquidity ratios, return on capital employed and gearing
- B. Operating expenses and net profit
- C. Cash receipts from customers
- D. Short-term liabilities (e.g., unpaid taxes and bank overdraft)
Answer: D
Explanation:
A balance sheet sets out assets, liabilities and equity at a point in time. Current (short-term) liabilities such as overdrafts and tax creditors are part of it. Cash receipts (A) sit in cash-flow statements; expenses and profit (B) are in the income statement; ratios (C) are derived metrics, not items on the statement.
Reference: CIPS L4M4 Study Guide (v2): LO "Application" - supplier financial appraisal; interpreting the statement of financial position.
NEW QUESTION # 62
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. 1 and 2 only
- C. 2 and 4 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 # 63
Which of the following is an advantage to the TUPE regulations?
- A. Reduced overheads for the buying organisation
- B. Value for money for the buying organisation
- C. Continuity of supply for the buying organisation
- D. Increase in buyer power
Answer: C
Explanation:
Continuity of supply for the buying organisation is an advantage of TUPE regulations.
TUPE is the Transfer of Undertakings (Protection of Employment). It's when the workforce / em-ployees of one company go to work for another one, usually after their company is bought out. They're transferred to the new company along with the furniture and buildings.
TUPE is UK specific. You don't need to know too much details about it for this exam - just what it is and the benefits. The main benefit is people don't lose their jobs when their company gets bought out. Basic guide to TUPE (pinsentmasons.com)
NEW QUESTION # 64
According to the CIPS code of conduct, which laws should a procurement professional adhere to?
- A. all laws within the country they work in
- B. all laws within countries they have business and contracts in
- C. all international procurement legislation
- D. all laws published by international organisations such as ILO
Answer: B
Explanation:
The CIPS Code of Conduct says to adhere to all laws of countries in which I practice. So if you're in the UK and procure stuff from China, you need to abide by both UK and Chinese laws, not just UK laws.
There's no international procurement laws- these are all different for different countries.
ILO doesn't publish laws.
NEW QUESTION # 65
What course of action should be taken when an audit of a supplier identifies evidence of human rights malpractice?
- A. Allow the supplier to complete current orders while pursuing alternatives
- B. Remove all business and inform press organisations to escalate to government authorities
- C. Immediately halt all orders and switch to an alternative source of supply
- 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 # 66
"Phishing" occurs when an employee receives a false email that appears genuine, exposing the organisation to cybercrime. Which crime category does this fall under?
- A. Corruption
- B. Human rights
- C. Fraud
- D. Bribery
Answer: C
Explanation:
Phishing is a form of fraud, where deception is used to gain financial advantage or access to sensitive data. It is not corruption (misuse of power), bribery (offering inducements), or a human rights issue. Procurement professionals must be alert to fraud risks in supply chains, including cyber-enabled risks such as phishing and invoice fraud. Responsible sourcing extends to protecting organisational data and finances against such attacks, often through robust controls, training, and supplier verification procedures.
Reference: CIPS L4M4 Study Guide (v2), LO: "Concepts" - fraud, corruption, and ethical risks in supply chains.
NEW QUESTION # 67
The Freedom of Information Act is a piece of UK legislation which allows members of the public to request information on issues such as public sector sourcing. When a request is made, it is compulsory for the public sector to provide this information to the public. Is this statement true?
- A. yes- the information must be provided within 28 days
- B. yes- the information must be posted publically online
- C. no- the public sector can choose not to publish information if it is not deamed to be in the public interest
- D. no- the public sector does not need to provide information on sourcing activities
Answer: C
Explanation:
the correct answer is 'no- the public sector can choose not to publish information if it is not deemed to be in the public interest'.
They use something called the 'public interest test' to determine if the information should be re-leased or not.
For example they may not respond to a request asking how many bullets the UK Army has in storage, as that would be detrimental to national security interests.
Responses to requests are made within 21 days, not 28.
NEW QUESTION # 68
Which of the following characteristics are likely to be required within sourcing processes undertaken in the public sector?
* An emphasis on long-term supplier relationships where possible
* Maintaining service levels within value and cost parameters
* All dealings between buyers and suppliers are kept confidential
* A competitive tendering process is usually encouraged
- A. 1 and 3 only
- B. 2 and 3 only
- C. 1 and 2 only
- D. 2 and 4 only
Answer: D
Explanation:
In public sector procurement, maintaining service levels within value and cost parameters is essential to ensure efficient use of public funds. Additionally, a competitive tendering process is encouraged to promote transparency, fairness, and value for money. While long-term supplier relationships can be beneficial, they are not always feasible or emphasized in the public sector due to regulations requiring periodic re-tendering.
Confidentiality is important, but public sector procurement often requires a degree of transparency that precludes complete confidentiality in dealings.
Reference:
CIPS Level 4 Diploma in Procurement and Supply, L4M4 Study Guide, Section 1.4: Public Sector Procurement Characteristics
NEW QUESTION # 69
Private sector procurement organisations should always allow suppliers at least 35 days to respond to invitations to tender. Is this statement true?
- A. Yes, because that timeframe is internationally recognised
- B. No, because the complexity of the tender should inform the response timescale
- C. No, because this timeframe causes unacceptable delays
- D. Yes, because it helps suppliers to plan and prioritise
Answer: B
Explanation:
The 35-day minimum applies to public sector procurement under EU/UK directives, not the private sector. In private procurement, response times should be proportional to the complexity and value of the requirement.
Simple RFQs may require only a few days, while complex tenders involving technical submissions may justifiably need weeks. Responsible sourcing involves ensuring suppliers have fair opportunity to respond adequately, but without unnecessary delays that could affect business needs. Therefore, rigidly applying a fixed number of days in the private sector is neither necessary nor efficient.
Reference: CIPS L4M4 Study Guide (v2), LO: "Application" - procurement timelines, public vs private sector differences.
NEW QUESTION # 70
What might a buyer encounter if the supplier's government has introduced a protectionist measure?
- A. Inward processing relief
- B. Carnets
- C. Import duties
- D. Arbitration
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 # 71
Ivan is an investor who is looking to invest in new businesses. He is reviewing several companies and working out what his equity would be. Which of the following does Ivan need to know tocalculate shareholder equity? Select TWO.
- A. total assets
- B. net income
- C. total liabilities
- D. net profit
Answer: A,C
Explanation:
Shareholder Equity = Total Assets - Total Liabilities
NEW QUESTION # 72
As a procurement officer for a large organisation, a supplier approaches you on social media offering to take you out for dinner to discuss a recent open opportunity and mentions a financial reward if you help them win the business. You accept the invite. Was this the right thing to do?
- A. Yes, you are free to do what you like outside of business hours
- B. Yes, you are keen to see what is on offer as you are only on minimum wage currently and need extra money
- C. No, but you will go for the dinner and see what they offer, because it is up to you to decide if you should accept
- D. No, it is not appropriate to discuss open opportunities with one provider and not another
Answer: D
Explanation:
Accepting an invitation under such circumstances would violate ethical standards, as it could create a conflict of interest. Ethical sourcing and procurement practices require impartiality, and any perceived favoritism or bias can harm the organisation's integrity.
NEW QUESTION # 73
A buyer for a large manufacturing organisation is assessing a sole supplier tender opportunity. The buyer is finding it challenging to differentiate the proposals on unit purchase price. Are there any added values that the procurement manager can use to leverage the sole supplier proposal?
- A. Yes, but only if the buyer decides to re-start the tender opportunity
- B. No, the buyer must make the decision based on the existing information
- C. No, because a buyer has no leverage over a sole supplier
- D. Yes, the buyer can negotiate on aspects such as after-sales service
Answer: D
Explanation:
In cases where price differentiation is minimal, negotiating on added-value services like after-sales support can offer additional benefits. This aligns with responsible sourcing by focusing on long-term value and fostering a cooperative relationship with the supplier.
NEW QUESTION # 74
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?
- A. The buyer will find it difficult to negotiate a lower price for products containing wheat-based ingredients
- B. Bakery produce is likely to be at a lower price as there is less availability of wheat flour in the market
- C. The buyer will be in a strong bargaining position to reduce the price of wheat-based food items
- D. The price for wheat-based produce will not be affected by the global shortages as demand is still high
Answer: A
Explanation:
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.
Reference: CIPS L4M4 Study Guide (v2), LO: "Implications" - commodity markets, supply/demand dynamics, negotiation power.
NEW QUESTION # 75
Which of the following financial ratios would indicate a supplier's potential exposure risk to a steep rise in inflation?
- A. current ratio
- B. gearing ratio
- C. acid test
- D. gross profit margin
Answer: B
Explanation:
The correct answer is 'gearing ratio'.
Gearing measures how much of a company's funding is based on long-term debt or loans- this would be affected by a steep rise in inflation. If a company has a mortgage on their offices or facto-ry and they need to remortgage and inflation has gone up a lot- they'll be paying a lot more on their mortgage. This will severely effect the gearing ratio as they'll have more outgoings than incoming.
Gross profit margin COULD be affected by inflation, for example if you've got hyper-inflation and the country goes into recession and people stop buying your product. However, this answer isn't al-ways right and depends on many factors- the industry, the product, the company etc, so for the purpose of CIPS should be discounted.
There are many industries which are immune to inflation.
NEW QUESTION # 76
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