The lengths of welds are to be no less than those specified by design requirements and detail drawings.
The welder has an undercut concern if he/she welds all the way to the edge, but it can easily be done without undercutting. Some welders can do it and some can't. It's all in their technique.
Will the shortened weld affect the performance of the weld?
It could. It depends on the types of stresses that the welds will be subjected to. I don't know how to calculate the weld strength for flare bevels, but just to give you an idea, if the weld were, say, a 1/4" fillet 4" long: .928 x 4 x 4 = 14.848 kips of weld metal strength. For that same 1/4" fillet 3 1/2" long: .928 x 4 x 3.5 = 12.992 kips of weld metal strength. That's almost 2,000 pounds less strength, and the calculations are based on the joints being properly welded, which could be another issue. I know thee's a safety factor figured into designs, but that would be for an engineer to decide. If your inspecting to D1.1, the welds are rejectable.