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.

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.