If you want to grade students without a grade but provide a 'sufficient' or 'insufficient', it is best to use a 'selectbox' type Grade Item and use the 'pass/fail' scheme.

Below is an example of the pass/fail scheme.

The instructor can grade an assignment using one of the three options:

1.  type a dash (-), to evaluate with a value 0 

2.  enter values between 1 and 54, to evaluate an insufficiency (fail)

3. enter values between 55 and 100, to evaluate an sufficiency (pass)

To use the pass/fail scheme, first create  a 'Selectbox' Grade Item Type.
The Max. points and weight of the grade differs per course. Assignments can also be attached to this Grade Item, with Turnitin.

Create a new Grade Item and select the Pass/Fail scheme.

Once you save and close, in the Manage Grades table, you can see under the heading "type" that indeed the grade is a Selectbox type. 

Within the Setup Wizard, you can utilise the standard settings.