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Narrative: The helicopter was positioning for forestry spraying operations and was being flown by a student pilot who was receiving type-rating instruction. The instructor simulated a hydraulic system failure by pressing the HYD TEST (hydraulic test) button. Whenthe student pilot began to experience control difficulties, the instructor took over and asked the student to turn the hydraulics back on. The student mistakenly selected the auxiliary hydraulics button, by which time the helicopter was uncontrollable in yaw. The instructor managed to reset the HYD TEST button, but hydraulic power was not restored. He was unable to prevent the rotation continuing so elected to place the machine on the ground before the situation worsened. The helicopter rolled onto its side upon touching down. Hydraulic failure is normally simulated in the AS350 series by depressing the HYD TEST button. This depressurises the system, and the three accumulators in the roll and pitch circuits will continue to provide hydraulic assistance long enough for the pilot to reduce speed to the safe operating range of between 40 and 60 knots. Once the accumulator pressure has been exhausted, the aircraft is effectively under manual control, and the pilot will feel significant loads on the controls. The flight manual actions for hydraulic failure are firstly to reduce collective pitch and adjust the airspeed to between 40 and 60 knots, and secondly to operate the Hydraulic Cut-Off switch on the collective lever. This switch serves to eliminate any residual pressure on the servo pistons, minimising the mechanical loads required to move the control linkages. It also cancels the warning horn, which sounds when hydraulic pressure is lost. The B2 model has an additional accumulator in the yaw control circuit. Operating the HYD TEST button depressurises this accumulator immediately, but in the case of an actual hydraulic failure, this accumulator remains pressurised indefinitely (according to the flight manual), even when the collective switch is operated. Simulating hydraulic failure in the B2 model by using the HYD TEST button will result in control loads being felt immediately in the yaw circuit, with the normal delay in the roll and pitch circuits. There is a note in the emergency section of the flight manual that states: "Do not press the HYD TEST button; this will cause immediate depressurisation of the accumulator and the resulting control loads may be heavy." In this occurrence, when the instructor simulated hydraulic failure by means of the HYD TEST button, the student would have immediately felt control loads though the yaw pedals but normal forces on the cyclic and collective until the accumulator pressures discharged. By the time the latter occurred, he should have had the speed within the recommended range and operated the Hydraulic Cut-Off switch on the collective lever. However, the collective switch was not operated in this case, and the instructor did not reset the HYD TEST button until after control difficulty was experienced. This action did not immediately restore the hydraulic system to its normal operation. The instructor was of the opinion that this was due to the time the accumulators took to recharge