L4M4 Exam Certification & L4M4 Reliable Exam Book

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CIPS Ethical and Responsible Sourcing Sample Questions (Q86-Q91):

NEW QUESTION # 86
Which of the following are key areas of regulations governing responsible procurement and supply?

Answer: C

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 # 87
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?

Answer: B

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 # 88
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?

Answer: A

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 # 89
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

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 # 90
Which of the following can be undertaken by the buyer in relation to the governance of a supplier's ethical and sustainable behaviours?
* Review the insurance clauses in the contract
* Check that the supplier's internal policies are up to date
* Check the supplier's conflict of interest register for their contract
* Review the non-disclosure agreement for their contract

Answer: D

Explanation:
Governance of ethical and sustainable behaviour focuses on ensuring suppliers have the right systems, policies, and transparency measures in place. Reviewing insurance clauses ensures suppliers are prepared to manage liability and risks responsibly. Checking conflict of interest registers promotes transparency and prevents corruption. By contrast, NDAs protect confidentiality but are not primarily ethical governance tools, and simply checking "up-to-date policies" without context may not guarantee compliance. CIPS highlights governance mechanisms such as audits, policy reviews, and conflict registers as integral to monitoring ethical performance and ensuring accountability.
Reference: CIPS L4M4 Study Guide (v2), LO: "Implementation" - governance measures, monitoring supplier ethics.


NEW QUESTION # 91
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