To reproduce:

• Create new course with :
  • Enable completion tracking : Yes
  • Enrol 2 students: Student1 and Student2
  • Add 2 competencies to this course
• Create an Assignment :
  • In the Activity completion section:
    • Completion tracking : Show activity as complete when conditions are met
    • Require view : unchecked
    • Require grade : Check only the option "Student must receive a grade to complete this activity"
  • In the Competencies section:
    • Add 2 competencies to activity
    • Upon activity completion : Complete the competency
  • Save and return to course
• Go to activity Assignment and grade Student1
• Go to Course => Grades with mode Editing On Screen Shot 2023-08-09 at 16.03.43.png
  • Give one note for Student2 on Assignment activity
  • Save changes

Observation:

• Go to Course => Reports => Activity completion
  • The activity Assignment is completed by Student1 and Student2
• Go to Course => Reports => Competency breakdown
  • The competencies are completed by Student1 
  • The competencies are not completed by Student2

Expectation :

• The competencies must be completed by Student1 and Student2 because the Assignment activity is already completed by both users.

This problem is maybe related to this tracker MDL-32103