To reproduce.

• Create a new, empty course with default settings (leave group mode off)
• Enrol a user as a non-editing teacher. Make sure they don't have other/higher assignments
• Log in as that user
• Run the Participation report

It doesn't work. Above message is generated. 

Analysis...

There are really two problems...

1. The report tries to generate a group select menu regardless of the group status of the course
2. The API function - groups_allgroups_course_menu - relies on the capability moodle/site:accessallgroups to return a functionless 'All participants' string when there are no groups. The non-editing teacher role doesn not have this capability and the function returns an empty string. This, in turn, causes the error message.