When I see a defect in the application in the testing process I go to the Defects
Tab and click on Add Defect button and enter the details of the defect and attach
any snapshots of the defect and close it. The status New will be assigned to
that defect. I can mail that defect to the concerned developer from TestDirector
or ask the developer to take a look at the defect in TestDirector. Developer after
seeing the defect can change the status to Open which means he/she is
working on fixing it. When the fixing is done the developer can change the status
to Fixed . When developer feels it not required to fix at that moment he changes the status as DIFFERED. I can then retest the defect after the fresh build of the application and if found satisfied I can Close the defect or Reopen it if I am not satisfied or the defect is not fixed.
The developer has the right to Reject the defect with proper reason attached to
it if he/she thinks that it is not a defect.