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NEW QUESTION # 60
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 # 61
A buyer has been working with their business managers on a tender. The buyer is now assessing the tender proposals from the external market. Is it good practice for the procurement buyer to makesourcing recommendations?
- A. No, it is a lengthy, costly, and unnecessary step for the procurement buyer to engage business managers
- B. Yes, the procurement buyer should assess and take all decisions to award the tender independently of the business managers to avoid conflict of interest
- C. No, the buyer's recommendations are not relevant to the final sourcing decision, which must be taken by the business managers
- D. Yes, the procurement buyer can advise on the competitive proposal but should engage with the business managers about the decision to award the tender
Answer: D
Explanation:
Engaging with business managers while making sourcing recommendations ensures that the buyer considers multiple perspectives, reducing potential biases and improving decision-making. This approach aligns with ethical sourcing practices by promoting collaboration and transparency in tender decisions.
NEW QUESTION # 62
Which of the following financial ratios would indicate a supplier's potential exposure risk to a steeprise 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 # 63
A procurement manager for a major retail group is using ratio analysis to assess the financial viability of suppliers who have tendered for a logistics services tender. The recommended supplier has a current ratio of
0.6. What are the potential consequences of awarding the contract to this supplier, given their current ratio is below 1?
- A. The supplier will be unable to cover long-term liabilities from revenues
- B. The supplier will have cash reserves to cover unexpected expenses
- C. The supplier will be unable to pay its short-term liabilities using current assets
- D. The results of the current ratio do not mean anything as long as the supplier has proven technical merit
Answer: C
Explanation:
A current ratio below 1 suggests that the supplier may not have sufficient current assets to cover short-term liabilities, which could pose a risk to the buyer. Assessing financial stability aligns with responsible sourcing practices, as it ensures suppliers can fulfill contracts without disruption.
NEW QUESTION # 64
The procurement team received an urgent request from the business to source quotations forpest control services. The team decided to use a local newspaper to advertise the requirements. Was this an appropriate approach to use in the circumstance?
- A. Yes, they must seek as many bids as possible even if it takes longer
- B. No, because international vendors must also be notified of the opportunity
- C. No, because they might receive too many irrelevant proposals which may delay the assessing process
- D. Yes, so that the local pest control sector can decide between them who should bid
Answer: C
Explanation:
Advertising in a local newspaper for urgent services like pest control may not be the most efficient approach.
It can lead to an overwhelming number of responses, many of which may not meet the specific requirements, thereby delaying the evaluation process. For urgent needs, direct sourcing from pre-qualified suppliers or using existing frameworks is often more effective.
Reference:
CIPS Level 4 Diploma in Procurement and Supply, L4M4 Study Guide, Section 2.2: Tendering Procedures
NEW QUESTION # 65
When might a company send a Request for Information (RFI) to a supplier instead of a Request for Quotation (RFQ)? Select TWO that apply:
- A. To determine whether the supplier is able to fulfill a purchase order that has already been placed
- B. To establish the details of environmental and quality certificates that the supplier may have
- C. To ask for the details of the product or the range of services that the supplier has to offer
- D. To obtain indicative prices that could be offered for a range of required products
- E. To negotiate the payment terms detailed in the terms and conditions of sale
Answer: A,B,C,D
Explanation:
A Request for Information (RFI) is utilized during the early stages of the procurement process to gather general information about potential suppliers' capabilities, products, or services. It helps in understanding the market and narrowing down supplier options before moving to more detailed requests like RFQs or RFPs.
* Option B:Obtaining indicative prices helps in budgeting and understanding market rates.
* Option C:Gathering details about products or services allows the buyer to assess the supplier's offerings and suitability.
Options A, D, and E are more appropriate for later stages in the procurement process, such as during RFQs or contract negotiations.
Reference:
CIPS Level 4 Diploma in Procurement and Supply, L4M4 Study Guide, Section 2.1: Sourcing and Contracting Process
NEW QUESTION # 66
What is a risk of pre-warning a supplier that you will conduct an audit of their facilities?
- A. they may coach staff in what to say
- B. they will not perform regular duties that day
- C. they will not be able to make that time and date
- D. they will not achieve KPIs
Answer: A
Explanation:
A risk of pre-planning an audit is the supplier has time to prepare for it. It's a good thing in that they can get their paperwork in order but the downside is they can overprepare so you don't get a realis-tic representation of what they're doing. One way they can do this is coaching staff in what to say to the auditors.
NEW QUESTION # 67
What is a major benefit to using Incoterms when sourcing goods internationally?
- A. it ensures value for money
- B. it ensures ethical business practices
- C. it replaces the need for insurance
- D. it replaces lengthy contractual clauses
Answer: D
Explanation:
Incoterms can replace lengthy contract clauses as they replace the need for contracts to detail which party is responsible for organising transport, paying duties, having the insurance etc.
Incoterms is an odd one for exam topics- some students say it was a huge part of their exam and there were many questions on this. Others said there were just one or two. Questions get randomly assigned from the bank so it's completely random how many you'll get on this topic.
NEW QUESTION # 68
Which of the following is considered as part of ESG?
- A. economic and social governance
- B. market conditions and product lifecycle
- C. liquidity, gearing and profitability
- D. bribery, corruption and the environment
Answer: B
Explanation:
The correct answer is bribery, corruption and the environment.
ESG stands for environmental and social governance. It's the new buzzword for CIPS and is basically everything to do with ethical procurement- so areas such as bribery and corruption are included as well as the environment.
Option 4 is incorrect as economic doesn't come into it.
NEW QUESTION # 69
A company has a requirement for an item that has been identified as strategic on the positioning model. The company needs to invite competitive tenders and ensure the selected supplier of this item is in a good financial position. What should the company ask the suppliers to send to show that their current assets cover their current liabilities?
- A. Annual turnover
- B. Acid test
- C. Gearing ratio
- D. Profit and loss account
Answer: B
Explanation:
The acid test (quick ratio) is an effective measure of a supplier's ability to meet short-term liabilities, providing insights into financial stability. This aligns with responsible sourcing by ensuring the supplier is financially capable of fulfilling a strategic contract.
NEW QUESTION # 70
Which of the following are procurement procedures permissible under EU Public Procurement rules? Select TWO that apply.
- A. Complex procedure
- B. Conformance procedure
- C. Public procedure
- D. Open procedure
- E. Restricted procedure
Answer: D,E
Explanation:
Under EU Public Procurement rules, the permissible procurement procedures include the Open Procedure and the Restricted Procedure. The Open Procedure allows any interested party to submit a tender, while the Restricted Procedure involves a two-stage process where only selected candidates are invited to submit tenders. These procedures are designed to ensure transparency, competition, and equal treatment in public procurement.
Exact Extract from Study Guide:
"The EU Public Procurement Directive outlines several procedures including Open Procedure and Restricted Procedure, which are designed to facilitate fair and transparent procurement processes."
NEW QUESTION # 71
What is the best way to demonstrate that your organisation does not tolerate bribery and corruption?
- A. Requesting suppliers' ethical policies annually
- B. Having full anti-bribery training, policies, and procedures in place
- C. Asking all suppliers to read your organisation's anti-bribery policy
- D. Not working with suppliers who have a reputation for bribery
Answer: B
Explanation:
The most effective way to demonstrate zero tolerance is by embedding a comprehensive anti-bribery framework: clear policies, mandatory staff and supplier training, reporting channels, and monitoring. Simply requesting suppliers' policies or avoiding known offenders is reactive, not proactive. Requiring suppliers to read policies without internal enforcement lacks substance. CIPS highlights that robust governance structures, supported by recognised frameworks such as the UK Bribery Act or FCPA, reinforce organisational credibility, protect reputation, and ensure compliance. This builds trust across supply chains and ensures ethical standards are maintained.
Reference: CIPS L4M4 Study Guide (v2), LO: "Concepts" - ethics, anti-bribery and corruption frameworks.
NEW QUESTION # 72
There has been a notable growth in international sourcing in the recent years, despite the many challenges involved. Buyers are therefore expected to develop their skills in this specialised area of sourcing. Which of the following factors may have contributed to this steady increase in international sourcing?
- A. National legal frameworks and their interpretation
- B. Exchange rate fluctuations and foreign exchange issues
- C. The existence of trading blocs and a reduction in trade barriers
- D. Different time zones and cultural norms in various markets
Answer: C
Explanation:
The growth in international sourcing has been significantly supported by theexistence of trading blocs and the reduction of trade barriers, such as tariffs and quotas. Trading blocs encourage cross-border trade by simplifying regulations, reducing duties, and improving market access between member countries. Exchange rate fluctuations, cultural differences, and varying legal frameworks representchallenges, not drivers, of international sourcing. Ethical and responsible sourcing requires procurement professionals to understand how global trade agreements and reduced barriers create opportunities for cost savings, supplier diversification, and access to global expertise, while still managing associated risks.
Reference:CIPS L4M4 Ethical & Responsible Sourcing Study Guide (v2) - international sourcing drivers; trade blocs and globalisation.
NEW QUESTION # 73
Why do tenders often have longer timescales in the public sector when compared with those of the private sector?
- A. All public sector purchases are mandated to use a tendering procedure
- B. There is a more detailed debrief requirement in the public sector
- C. Regulation of the public sector usually dictates minimum timescales
- D. There is wider stakeholder involvement in the public sector
Answer: C
Explanation:
Public sector procurement is governed by specific regulations that stipulate minimum timescales for various stages of the tendering process. These regulations are designed to ensure transparency, fairness, and adequate time for suppliers to prepare their bids. For instance, under the Procurement Act 2023, certain procedures have defined minimum periods for tender submissions to allow sufficient time for supplier participation.
Exact Extract from Study Guide:
"Public sector procurement is subject to specific regulations that dictate minimum timescales for tendering processes to ensure fairness and transparency."
NEW QUESTION # 74
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?
- A. The contract will be awarded strictly on pricing criteria
- B. Direct negotiations occur prior to suppliers submitting their offer
- C. It is only relevant when there are few suppliers in the market
- D. Suppliers responding to the tender are pre-qualified
Answer: D
Explanation:
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.
NEW QUESTION # 75
A balance sheet will show a company's assets, liabilities and shareholder equity. What is share-holder equity?
- A. the amount of money held in the company's bank account
- B. the amount of money from retained earnings
- C. the owners' residual claim once all debt has been paid
- D. the profit from sales once tax has been deducted
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 # 76
Which of the following financial documents would show whether a supplier has sufficient funds to pay their subcontractors in the short term?
- A. balance sheet
- B. ESG policy
- C. cash flow statement
- D. profit and loss account
Answer: C
Explanation:
A cash flow statement shows the money coming in and out. This would therefore show whether a supplier has enough money coming in, to be able to pay some of it out to a subcontractor.
P&L and Balance Sheets look more broadly at finances, rather than saying what's physically in the bank at a specific given time.
Do learn the difference between these three financial documents for the exam.
Balance Sheet: Explanation, Components, and Examples (investopedia.com) Profit and Loss Statement Meaning, Importance, Types, and Examples (investopedia.com) Cash Flow Statement: How to Read and Understand It (investopedia.com)
NEW QUESTION # 77
A procurement manager of a medium-sized company has suggested to their executive board that implementing an ISO environmental standard would improve procurement practices and reduce environmental and social impacts. However, some colleagues are concerned about the potential complexity and supplier resistance. Should the company go ahead with the recommendation?
- A. Yes, implementation would guarantee that the company is compliant with all environmental laws
- B. No, because ISO standards are only relevant to large organisations
- C. Yes, as it would align with, and help to achieve, sustainability goals
- D. No, ISO standards are too complex for staff and suppliers to understand and follow
Answer: C
Explanation:
Adopting ISO environmental standards aligns procurement practices with sustainability goals and helps reduce environmental and social impacts. Although implementing ISO standards may require initial adjustments, they foster long-term benefits by promoting responsible and ethical sourcing practices across the supply chain.
NEW QUESTION # 78
Which of the following are signs that modern-day slavery might be taking place within the supply chain?
Select THREE.
- A. supplier based in a country with a low score on the Corruption Perception Index
- B. suppliers who speak English as a second language
- C. poor quality products
- D. suspiciously low labour costs
- E. workers that live on-site
Answer: C,D,E
Explanation:
The correct answers are; suspiciously low labour costs, workers living on site and poor quality products (as this signals that the workforce may be unskilled).
A low score on the CPI is a good thing (high scores are more likely to signify slavery concerns) and just because someone speaks English as a second language doesn't mean you automatically need to be suspicious.
That would be prejudice.
NEW QUESTION # 79
Which of the following would you expect to find in an Invitation to Tender? Select THREE
- A. deadline(Correct)
- B. awarding body
- C. risk assessments
- D. pricing schedule
- E. qualifications required
Answer: B,E
Explanation:
An ITT would include details on the awarding body (usually a brief overview of the buyer), the deadline (bids must be received by a certain date) and qualifications required (such as ISO requirements or competency certificates of staff members if it's a service contract). You wouldn't find pricing schedules in an ITT (this would be provided by the supplier in response to the ITT), nor would you find risk assessments (a supplier might be asked to provide one as part of the quality assessment of the tender though).
Invitation To Tender Simply Explained I Thornton & Lowe (thorntonandlowe.com)
NEW QUESTION # 80
Sourcing is part of the procurement cycle and is likely to be used in conjunction with which activities? (Select TWO)
- A. Requesting quotations
- B. Raising purchase requisitions
- C. Uploading goods received notes
- D. Identifying potential suppliers
- E. Creating call-off orders
Answer: A,D
Explanation:
Sourcing relates to identifying suppliers (E) and requesting quotations (D) as part of the market engagement stage of the procurement cycle. By contrast, creating call-off orders, raising requisitions, and goods receipting are post-contract operational activities. Responsible sourcing highlights that supplier identification and quotations are key to ensuring ethical, competitive, and compliant supply chains. These activities help ensure alignment with organisational goals, supplier diversity, and sustainability objectives.
Reference: CIPS L4M4 Study Guide (v2), LO: "Application" - sourcing activities within the procurement cycle.
NEW QUESTION # 81
Which of the following are key areas of regulations governing responsible procurement and supply?
- A. Digitisation, artificial intelligence, and innovations
- B. Company culture, product branding, and staff uniforms
- C. Competitive pricing, unsecured loans, and threats of new entrants
- D. Ethical practice, data protection, and marketplace competition
Answer: D
Explanation:
Regulatory frameworks that affect procurement focus on ethical practice (anti-bribery, modern slavery, human rights), data protection (GDPR and similar), and competition law (to prevent collusion and monopolistic practices). While digitisation and innovation are important trends, they are not regulatory requirements. Similarly, culture, branding, and uniforms are internal matters, not regulatory areas.
Responsible sourcing requires procurement professionals to ensure compliance with these regulations to protect stakeholders, maintain fairness, and safeguard organisational reputation.
Reference: CIPS L4M4 Study Guide (v2), LO: "Concepts" - legal and regulatory environment of ethical sourcing.
NEW QUESTION # 82
You have been asked to set some key performance indicators (KPIs) for your local stationery provider and you decide to set the following requirements:
To deliver all orders within a one-hour period
To collect any returns within one hour
Are these KPIs appropriate?
- A. Yes, because the customer is always right so the supplier should do it
- B. No, because you do not want to make demands and ruin future relations
- C. No, because they are not realistic or achievable for a company to fulfil
- D. Yes, because they are local so it should be easy for them if they want the business
Answer: C
Explanation:
KPIs must be realistic, measurable, and achievable to drive performance improvement without creating unfair or unworkable expectations. Requiring delivery and returns within one hour is unlikely to be practical, even for a local supplier, and could increase costs, operational strain, or service failure. Ethical and responsible sourcing promotes setting proportionate KPIs that support continuous improvement and sustainable supplier relationships. Unrealistic KPIs undermine collaboration, damage trust, and may result in non-compliance rather than improved performance.
Reference: CIPS L4M4 Ethical & Responsible Sourcing Study Guide (v2) - performance management; KPIs and supplier relationship management.
NEW QUESTION # 83
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