As an undergraduate, I've been working as a TA in an electronics lab for a while. Recently I have been asked to grade other students' lab reports. I have also done some oral examination, but I guess that's relatively fine, since there you can indeed see if he knows what he's supposed to know.
However, when it comes to grading reports, they may be to some extent copied from other reports, may have data tampered with after the lab so they look correct, and in general are made to look correct through collaboration and some Google copy-paste, it becomes very hard to tell who deserves the grade and who doesn't.
Also, I myself wasn't getting good grades at those reports, and I never could understand what those correcting were expecting from me, so I would be grading on a different basis than they are. In fact, I really can't find much wrong with the reports, so I feel like I'm doing a lousy job (even though any time I express doubt about my judgement I am assured that stuff can't go wrong).
One final detail is that it's a hardware lab, and while I'm not bad at it, I'm headed straight to software, so I probably look at things from a different perspective, not to mention that what's important for me may be quite different.
Considering the above worries, does it seem fair that undergrad students grade the reports of younger undergrads, does it seem professional for those in charge of those groups assign such work to undergrad TAs, and finally, is it even legal for an undergrad to affect another undergraduate's grade by handling grading processes?