What the speaker says,is called narration or speech.Speeches are of two kinds.a.direct speech and b.indirect speech.When the speech is expressed according to the speaker's language,it is a direct speech.When the speech is expressed in other people(listener) language,it is an indirect speech.For example
He says,''I am honest.''
He says that he is honest.
From the above sentences;the first one is a direct speech and the later one is an indirect speech.
The sentence or clause within the inverted comma is called a reported speech.The verb outside the reported speech is called reporting verb and the noun or pronoun which performs the reporting verb is the subject of reporting verb and the noun or pronoun after reporting verb is the object of the reporting verb.
In first sentence''He'' is a subj. "says" is reporting verb and " I am honest" is a reported speech.
Read the bellow direct speeches:
He said,"I am reading my lesson."
They said to you,"How are you?"
Mother said to her son,"Do as I want."
I said to him,"May God bless you."
She said,"How sweet the girl is!"
Read the bellow indirect speech:
He said that he was reading his lesson.
They asked you how you were.
Mother told her son to do as she wanted.
I wished that God might bless him.
She exclaimed that the girl was very sweet.