Due to the COVID-19 pandemic, students were suddenly required to complete their assessments online. Higher education (HE) institutions and instructors likewise were suddenly forced to ensure competency achievement among students online. At many (HE) institutions, competency-based learning is mandatory. Approaching online assessment through online competency-based performance assessment is crucial to achieving institutions’ expectations. Online competency-based performance assessment is challenging; however, the use of an inquiry-based learning (IBL) allows teachers and students to involve themselves at a deeper level of instruction through differentiated activities. The assessment procedure through IBL implies an alternative view of instructors when designing their assessment, learning, and achievement of the learning objectives. The proposed conceptual framework involves a combination of competency-based learning principles, performance assessment, and IBL. In the initial stage, it is proposed to design differentiated IBL activities following the task description, considering the required competencies to be achieved. The final stage is tackling it as an assessment framework that focuses on performance for final summative purposes.