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In function RO or SWR you will see a function under the pull-down PERFORM to track denied work - or use F5+T. It will prompt for an op-code, reason, and a comment.
Your choices in UFO (invoice form options) determines if the denied items print on the customer and/or warranty invoice.
This detail can then be tracked in the websuite links or reported in the web-suite reports or from function RDW (Report denied work)