Co-managed devices are being tagged as not compliant in Entra ID

Good day!

Anyone experienced or familiar with this issue? 🙂

We have the following settings:

1. Conditional Access Policy that blocks Non-Compliant Devices in accessing Corporate Applications.

2. All Corporate Devices are Hybrid Azure AD Joined Devices and Co-Managed with SCCM and Intune

3. Compliance Workload of all devices are being managed by SCCM

Our issue is that devices are failing Conditional Access Policy because they are tagged Not Compliant in Entra ID. When I looked in to Intune the device has the correct compliance which is "See ConfigMgr" and the Software Center of the app also shows the device is Compliant.