SIUYA,
I was not aware that any bubble in the compass made it U/S, I have on several occasions by different engineers been told otherwise, however as you have a reference to a CAO I will just work of the engineers having a differing opinion of the regs then CASA.
As for asking the Inspector for his hrs, no I did not ask, he just told me. As for being sarcastic about his comments, to me at the time it like having someone tell you to keep your wings level in order to fly straight and level, yes it was advise, yes it is useful, however not exactly appropriate for me. In hind sight I will concede that the inspector may not have known my experience and was making his own judgment. (Note: I am not claiming to know all, just enough to keep from hitting the ground to hard, and generally arriving on time).
I was never audited again because after that event I have avoided with great care having to deal with CASA. The several times I have conversed with them they simply affirmed my opinion (perhaps with the exception of 1).
If they had really wanted to help out and get a feel for the industry they where trying to police then perhaps actually having been it themselves fist may have been a good start.