I did some research on aopa site and found this:
Other inspections are required for the instruments and equipment installed in the aircraft. However, some of these inspections are only required if the aircraft is operated under instrument flight rules. For example, another inspection you should be aware of is the altimeter system and altitude reporting system test and inspection. This inspection, described in FAR 91.411(a), is required if the aircraft is operated in controlled airspace under IFR. It mandates that within the preceding 24 calendar months, each static pressure system, each altimeter instrument, and each automatic pressure altitude reporting system must have been tested and inspected and found to comply with appendix E of Part 43. Automatic pressure altitude reporting system is just a fancy name for the mode c transponders altitude encoder.
So is this enough to prove to faa inspector?