Halliday & Matthiessen (2014: 532, 533):
To accommodate free indirect speech in our account, we thus need to expand Table 7-18 by dissociating the quote vs. report variable from the parataxis vs. hypotaxis one: see Table 7-25. As the table shows, free indirect speech can be projected both verbally and mentally, and includes both propositions and proposals – everything, in fact, that can be both quoted and reported (thus excluding minor speech functions since they can only be quoted).