Scenario: when I am trying to open a report in AX 2012 R2 CU7 it is displaying an Infolog with an error.
“Error while Setting server Report parameters and the report cannot be found(rsItemNotfound)”

Solution: Make sure that the reports are deployed and all are in the correct layer.
In order to deploy a report, procedure is
Open a new development Workspace(CTRL + D)
In AOT–>SSRS Reports –> <type reportname> and right click on the selected report and deploy it.

Even, the deployment of all the reports can be done by using a single command in Microsoft DynamicsAx 2012 Management Shell
Right click on the Management Shell and run as Administrator ,
Copy this command —- “Publish-AXReport –ReportName *” and press enter.

you will see a window and shows the deploying of reports progress.
After deploying the reports a message is displayed that Deployment is Complete

Now restart the AOS and when you open a report it must resolve your issue.