L4M4 Online Practice Questions

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."

Explanation:
The balance sheet, also known as the statement of financial position, provides a snapshot of an organisation’s assets, liabilities, and equity at 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) C financial statements and supplier assessment.

Explanation:
Responsible procurement and supply are governed by several key regulatory areas to ensure ethical and fair practices.
These include:
Ethical Practice: Ensures that organisations conduct business in a manner that is ethical and free from corruption.
Data Protection: Involves safeguarding personal and sensitive information, ensuring compliance with laws such as the General Data Protection Regulation (GDPR).
Marketplace Competition: Ensures fair competition among businesses, preventing monopolies and promoting consumer choice.
These areas are critical in maintaining integrity, trust, and compliance within procurement activities.
Exact Extract from Study Guide:
"Key areas of regulation that organisations must follow include data protection, ethical practice, health, safety and environment, worker rights, marketplace competition, and product safety standards."

Explanation:
Expenditure analysis by category/supplier enables buyers to track trends over time (A), supporting benchmarking and financial control. It also identifies opportunities for negotiation (C) by highlighting concentration of spend and potential leverage with suppliers. Marketing strategy, production scheduling, and stock disposal are outside procurement’s primary scope. Responsible sourcing relies on robust spend analysis to identify efficiency opportunities, reduce wasteful expenditure, and support supplier relationship management strategies, all while aligning with sustainability and compliance goals.
Reference: CIPS L4M4 Study Guide (v2), LO: “Application” C spend analysis and its role in responsible sourcing.

Explanation:
Analysing expenditure data by product category or supplier enables procurement managers to: Negotiate Better Prices: Identifying high-spend areas or suppliers can provide leverage in negotiations, leading to cost reductions.
Monitor Cost Trends: Tracking expenditure over time helps in understanding cost fluctuations,
budgeting, and forecasting future spend.
Exact Extract from Study Guide:
"Spend analysis is a process that analyses the historical spend data of your organisation to provide answers to questions concerning spend visibility, compliance, and cost-saving opportunities."