Navigation lights tell other vessels at night what you are and which way you're heading. A missing sidelight, or a tricolour lit while motoring, tells them something wrong. Of all the safety findings, it's the one a surveyor can test with one switch.
What the rules ask
Rules 22 and 25 of the COLREGs set the lights and ranges. Good Old Boat's summary for small boats: under 12 m, the white masthead light visible at 2 miles and the coloured sidelights at 1 mile; under 20 m, the coloured lights at 2 miles. A sailing yacht under 20 m may combine sidelights and sternlight in one tricolour lantern at or near the top of the mast, but only under sail. With the engine on, it's a power-driven vessel and shows sidelights, a sternlight and a masthead steaming light. At anchor, an all-round white light.
Lights should be certified for the range they claim, which matters when old incandescent fittings are swapped for LED.
How a surveyor checks it
Switch each light on in turn and walk round to see it from where another boat would: sidelights from ahead and each side, the sternlight from astern, the steaming light from ahead. Check the tricolour and anchor light at the masthead, from the deck or with binoculars. Look at each lens for crazing and fading, and each fitting for corrosion at the cable entry, where water gets in.
Then ask how the boat is used. Lights that fail on a day-sailer are a B; on a boat that makes night passages they're an A. A tricolour as the only light on a boat that motors at night is a rules finding.