AFAIK, it’s the latter. However, the case s officially out of my hands, so it’s all up to my superiors. I’m not sure whether or not a fail shows up in the transcript; in my time as a student any fail showed up in the transcript, but the practice has changed a few times since then.
There’ll be a note about the issue in their file, as well, though.
This always reminds me of the claim: academia doesn’t prepare you for real work.
In academia: You have to do you own work, finish on time and are judged based on how well you did it.
In real work, OTOH: You have to do you own work, finish on time and are judged based on how well you did it.
This “avoid doing your own work” crap has now got to be a big problem in businesses now.