CIPS LEVEL 4 MODULE 4 TEST QUESTIONS
AND ANSWERS
Question 1
some critical approaches to fostering an open dialogue with suppliers - Warning signs
and two-way feedback
Correct Answer
Non-compliance or missed deadlines in the corrective action plan should alert the
buying organisation to potential problems, potentially suggesting a values
misalignment with the supplier.
Continuous two-way feedback is critical for maintaining a healthy supplier
relationship and encouraging improvement.
Question 2
Defining Social value for money
Correct Answer
Social value for money involves considering the societal impact of procurement
decisions. This could include aspects such as the supplier's employment practices or
the effects on local communities. For instance, a company might choose to source
from a local supplier to support the local economy, even if cheaper options are
available elsewhere. Or it may decide to purchase from suppliers that give back to
the local community in some way, such as through charity donations or creating job
opportunities for people experiencing homelessness.
Question 3
Supplier responsibility in remedial actions
Correct Answer
The supplier plays a pivotal role in identifying the root cause of the non-compliance
recognised and raised by the buyer. actions not only correct the immediate issue
but also help to prevent similar repeat incidents. This protects both the supplier's
and buyer's reputations in the longer term.
Page 1 of 199
,Question 4
Commitment to ESG standards - Policies and practices
Correct Answer
Internal policies and practices that align with these statements.
For instance, a supplier's comprehensive waste management policy aligns with its
environmental values, thereby demonstrating a practical commitment to ESG
Question 5
Currency considerations - Ability to make and receive payments
Correct Answer
Historically, exchange controls limited access to currency and its movement.
Although less common today, such as controls still exist. Therefore, you should
verify that your buyer can access the currency required and make payments when
invoices are due.
However, not all payment regulations are restrictive. For instance, the EU payment
services directive enhances security and increases competition in the payment
industry. Similarly, the UK has a payment systems regulator overseeing the
payments industry
Question 6
Outsourcing - Risk management
Correct Answer
Spreading operational risks and dependencies with outsourcing partners improves
overall risk management, ensuring business continuity and reducing vulnerability to
single points of failure
Question 7
Governance considerations - Transparency
Correct Answer
Is the supplier transparent about its business practices, including its supply chain
operations, financial performance and governance structures?
Transparent suppliers provide clear insights into their practices, allowing buyers to
make informed decisions and assess potential risks effectively.
Page 2 of 199
,Question 8
Anti-corruption legislation
Correct Answer
- the Foreign Corrupt Practices Act (FCPA) in the US
- the Bribery Act in the UK
Question 9
Product safety standards - Safety of materials
Correct Answer
Safety standards also regulate the use of certain materials in products. For instance,
the use of lead in paint has been significantly restricted due to its health risks.
However, lead is still used in other applications, such as car batteries, where its risks
can be adequately managed.
Question 10
Health, safety and environment (HSE) and worker rights
Correct Answer
Worker rights encompass a range of protections, including the right to a safe and
healthy work environment, the right to fair wages, freedom from discrimination and
the right to form or join trade unions.
Question 11
Secondary data in procurement and supply
Correct Answer
refers to the information that has been collected by other individuals or
organisations, not specifically for your sourcing needs but has relevance and can be
utilised to gain insights about the supplier markets. It can come from various
sources and is valuable when it's impractical to collect primary data due to
constraints such as time or cost.
Page 3 of 199
, Question 12
Audit execution three key stages - closing meeting
Correct Answer
This is where the auditor presents their preliminary findings and discusses them
with the auditee. Any non-compliance or opportunities for improvement are
addressed, and the next steps, which will include the timeframe for providing a
written report, are agreed upon.
Question 13
Ethical considerations - privacy and data security.
Correct Answer
Protecting customer data is of the utmost importance in today's digital age.
Organisations should assess a supplier's measures to ensure the privacy and
security of customer data.
Suppliers should have robust data protection policies, secure IT systems and
compliance with relevant data privacy regulations. Suppliers that prioritise privacy
and data security demonstrate a commitment to safeguarding sensitive information
and building trust with their customers.
Question 14
Incoterms® standardised terms - DPU (Delivered at Place and Unloaded)
Correct Answer
Previously DAT (Delivered at Terminal). The seller bears all risks and costs associated
with delivering the goods and unloading them at the named place of destination.
The buyer is responsible for import clearance and applicable local taxes or import
duties.
Question 15
use of RFIs and RFQs in supplier selection - Transparency
Correct Answer
These processes provide a framework that promotes fairness and accountability,
vital for ethical procurement and supply practices.
Page 4 of 199
AND ANSWERS
Question 1
some critical approaches to fostering an open dialogue with suppliers - Warning signs
and two-way feedback
Correct Answer
Non-compliance or missed deadlines in the corrective action plan should alert the
buying organisation to potential problems, potentially suggesting a values
misalignment with the supplier.
Continuous two-way feedback is critical for maintaining a healthy supplier
relationship and encouraging improvement.
Question 2
Defining Social value for money
Correct Answer
Social value for money involves considering the societal impact of procurement
decisions. This could include aspects such as the supplier's employment practices or
the effects on local communities. For instance, a company might choose to source
from a local supplier to support the local economy, even if cheaper options are
available elsewhere. Or it may decide to purchase from suppliers that give back to
the local community in some way, such as through charity donations or creating job
opportunities for people experiencing homelessness.
Question 3
Supplier responsibility in remedial actions
Correct Answer
The supplier plays a pivotal role in identifying the root cause of the non-compliance
recognised and raised by the buyer. actions not only correct the immediate issue
but also help to prevent similar repeat incidents. This protects both the supplier's
and buyer's reputations in the longer term.
Page 1 of 199
,Question 4
Commitment to ESG standards - Policies and practices
Correct Answer
Internal policies and practices that align with these statements.
For instance, a supplier's comprehensive waste management policy aligns with its
environmental values, thereby demonstrating a practical commitment to ESG
Question 5
Currency considerations - Ability to make and receive payments
Correct Answer
Historically, exchange controls limited access to currency and its movement.
Although less common today, such as controls still exist. Therefore, you should
verify that your buyer can access the currency required and make payments when
invoices are due.
However, not all payment regulations are restrictive. For instance, the EU payment
services directive enhances security and increases competition in the payment
industry. Similarly, the UK has a payment systems regulator overseeing the
payments industry
Question 6
Outsourcing - Risk management
Correct Answer
Spreading operational risks and dependencies with outsourcing partners improves
overall risk management, ensuring business continuity and reducing vulnerability to
single points of failure
Question 7
Governance considerations - Transparency
Correct Answer
Is the supplier transparent about its business practices, including its supply chain
operations, financial performance and governance structures?
Transparent suppliers provide clear insights into their practices, allowing buyers to
make informed decisions and assess potential risks effectively.
Page 2 of 199
,Question 8
Anti-corruption legislation
Correct Answer
- the Foreign Corrupt Practices Act (FCPA) in the US
- the Bribery Act in the UK
Question 9
Product safety standards - Safety of materials
Correct Answer
Safety standards also regulate the use of certain materials in products. For instance,
the use of lead in paint has been significantly restricted due to its health risks.
However, lead is still used in other applications, such as car batteries, where its risks
can be adequately managed.
Question 10
Health, safety and environment (HSE) and worker rights
Correct Answer
Worker rights encompass a range of protections, including the right to a safe and
healthy work environment, the right to fair wages, freedom from discrimination and
the right to form or join trade unions.
Question 11
Secondary data in procurement and supply
Correct Answer
refers to the information that has been collected by other individuals or
organisations, not specifically for your sourcing needs but has relevance and can be
utilised to gain insights about the supplier markets. It can come from various
sources and is valuable when it's impractical to collect primary data due to
constraints such as time or cost.
Page 3 of 199
, Question 12
Audit execution three key stages - closing meeting
Correct Answer
This is where the auditor presents their preliminary findings and discusses them
with the auditee. Any non-compliance or opportunities for improvement are
addressed, and the next steps, which will include the timeframe for providing a
written report, are agreed upon.
Question 13
Ethical considerations - privacy and data security.
Correct Answer
Protecting customer data is of the utmost importance in today's digital age.
Organisations should assess a supplier's measures to ensure the privacy and
security of customer data.
Suppliers should have robust data protection policies, secure IT systems and
compliance with relevant data privacy regulations. Suppliers that prioritise privacy
and data security demonstrate a commitment to safeguarding sensitive information
and building trust with their customers.
Question 14
Incoterms® standardised terms - DPU (Delivered at Place and Unloaded)
Correct Answer
Previously DAT (Delivered at Terminal). The seller bears all risks and costs associated
with delivering the goods and unloading them at the named place of destination.
The buyer is responsible for import clearance and applicable local taxes or import
duties.
Question 15
use of RFIs and RFQs in supplier selection - Transparency
Correct Answer
These processes provide a framework that promotes fairness and accountability,
vital for ethical procurement and supply practices.
Page 4 of 199
