A knowledge base article about Do I have to fix files with red indicators? provided by the UC Berkeley IT Service Hub - Knowledge Portal
The Ally accessibility indicators are only visible to instructors (not students) to help make them aware of possible difficulties using assistive technologies such as text-to-speech, screen readers or zoom text.
You can click the indicator for guidance on how to improve the accessibility score for that file. You will not be penalized if you choose to ignore the red indicators, however, some of Ally's functionality will not be as robust. For example, the option to download alternative formats (HTML, MP3, ePub, etc.) will be limited or not available at all.
If you have a student with a Letter of Accommodation (LOA), that student can receive direct assistance from the Disability Students' Program (DSP) in order to access course content if alternative formats are not available through Ally.