About the error: This is actually not AX specific. It is with permissions on the SSRS site. The user may need to be granted access to get to the SSRS reports or it could be an issue with a setting.
Resolution: Some things to check to resolve the issue
1. Navigate to the Report Manager url (http://SSRSREPORTSERVERNAME/Reports/Pages/Folder.aspx), go to the Folder Settings and click on 'New Role Assignment'. Add the appropriate user or group. Make sure they have access to 'Browser. Content Manager, and DynamicsAXBrowser'.