diff --git a/cmd/audita/main_integration_test.go b/cmd/audita/main_integration_test.go
index 246aa2d..7c703a7 100644
--- a/cmd/audita/main_integration_test.go
+++ b/cmd/audita/main_integration_test.go
@@ -799,6 +799,41 @@ func TestSubprocessStdoutAndSelectedReportDirectory(t *testing.T) {
 	}
 }
 
+func TestSubprocessUsesIndependentTranscriptReportAndDebugDestinations(t *testing.T) {
+	f := newProcessFixture(t, "normal", "[grammar]")
+	transcriptDir := filepath.Join(f.dir, "transcripts")
+	reportDir := filepath.Join(f.dir, "reports")
+	debugDir := filepath.Join(f.dir, "debug")
+	for _, dir := range []string{transcriptDir, reportDir} {
+		if err := os.Mkdir(dir, 0700); err != nil {
+			t.Fatal(err)
+		}
+	}
+	f.output = filepath.Join(transcriptDir, "corrected.json")
+	code, stdout, stderr := f.run(t, true, "--report-dir", reportDir, "--debug", "--work-dir", debugDir)
+	if code != 0 || stdout != "" || !strings.HasPrefix(stderr, "Completed:") {
+		t.Fatalf("code=%d stdout=%q stderr=%q", code, stdout, stderr)
+	}
+	if output, err := os.ReadFile(f.output); err != nil || !bytes.Contains(output, []byte("Hello world")) {
+		t.Fatalf("transcript: %s %v", output, err)
+	}
+	for _, name := range []string{"errors.yml", "recoveries.yml", "report.md"} {
+		if _, err := os.Stat(filepath.Join(reportDir, name)); err != nil {
+			t.Fatalf("report %s: %v", name, err)
+		}
+		if _, err := os.Stat(filepath.Join(transcriptDir, name)); !os.IsNotExist(err) {
+			t.Fatalf("report %s appeared beside transcript: %v", name, err)
+		}
+	}
+	dirs, err := filepath.Glob(filepath.Join(debugDir, "run-*"))
+	if err != nil || len(dirs) != 1 {
+		t.Fatalf("debug runs: %v %v", dirs, err)
+	}
+	if _, err := os.Stat(filepath.Join(dirs[0], "correction-ledger.json")); err != nil {
+		t.Fatalf("debug capture: %v", err)
+	}
+}
+
 func TestSubprocessReportingAndDebugSelections(t *testing.T) {
 	var expectedOutput, expectedSummary string
 	for _, selection := range []struct{ reporting, debug bool }{
@@ -1016,6 +1051,44 @@ func TestSubprocessInvalidInputLeavesFailedReports(t *testing.T) {
 	}
 }
 
+func TestSubprocessInvalidInputWritesFailedReportsToSelectedDirectory(t *testing.T) {
+	f := newProcessFixture(t, "normal", "[grammar]")
+	if err := os.WriteFile(f.transcript, []byte("not JSON"), 0600); err != nil {
+		t.Fatal(err)
+	}
+	reportDir := filepath.Join(f.dir, "failed-reports")
+	if err := os.Mkdir(reportDir, 0700); err != nil {
+		t.Fatal(err)
+	}
+	code, _, _ := f.run(t, true, "--report-dir", reportDir)
+	if code != 1 || f.provider.callCount() != 0 {
+		t.Fatalf("invalid input dispatched: code=%d calls=%d", code, f.provider.callCount())
+	}
+	raw, err := os.ReadFile(filepath.Join(reportDir, "errors.yml"))
+	if err != nil {
+		t.Fatal(err)
+	}
+	var document reporting.ErrorsDocument
+	if err := yaml.Unmarshal(raw, &document); err != nil {
+		t.Fatal(err)
+	}
+	if document.Status != reporting.StatusFailed || len(document.Errors) != 1 || document.Errors[0].Scope != "run" {
+		t.Fatalf("failed report: %+v", document)
+	}
+	if _, err := os.Stat(filepath.Join(reportDir, "recoveries.yml")); err != nil {
+		t.Fatal(err)
+	}
+	if raw, err := os.ReadFile(filepath.Join(reportDir, "report.md")); err != nil || !bytes.Contains(raw, []byte("Status: failed")) {
+		t.Fatalf("Markdown status: %s %v", raw, err)
+	}
+	if _, err := os.Stat(filepath.Join(f.dir, "errors.yml")); !os.IsNotExist(err) {
+		t.Fatalf("failed report appeared in default directory: %v", err)
+	}
+	if _, err := os.Stat(f.output); !os.IsNotExist(err) {
+		t.Fatalf("failed transcript published: %v", err)
+	}
+}
+
 func TestSubprocessOutputFailureBeforeModelDispatch(t *testing.T) {
 	f := newProcessFixture(t, "normal", "[grammar]")
 	f.output = filepath.Join(f.dir, "missing", "output.json")
diff --git a/docs/cli.md b/docs/cli.md
index 12ab86e..2752f3e 100644
--- a/docs/cli.md
+++ b/docs/cli.md
@@ -48,12 +48,17 @@ validation. The shared setting flags are:
 An omitted or empty output value selects stdout. Nonempty output filenames are
 used literally, including whitespace.
 Reporting defaults to enabled. `--reporting=false` disables all three ordinary
-reports; an explicit false overrides a true file or overlay setting. With file
-output, reports go beside the transcript and `--report-dir` has no effect. With
-stdout output, `--report-dir` selects the report directory, defaulting to the
-invocation working directory. `--debug` separately enables retained detailed
-artifacts under `--work-dir`. Configuration inspection does not create or probe
-these output directories.
+reports; an explicit false overrides a true file or overlay setting. For stdout
+output, reports use the effective `reporting.stdout_dir`, which defaults to the
+invocation working directory. For file output, they go beside the transcript
+unless `--report-dir` is explicitly supplied. The flag selects the report
+directory for either transcript destination; a config-file or overlay value for
+`reporting.stdout_dir` alone affects stdout output only. A selected report
+directory must be nonblank when reporting is enabled. With reporting disabled,
+the report destination is inactive and is not probed. `--debug` separately
+enables retained detailed artifacts under `--work-dir`; selecting `--work-dir`
+alone does not enable capture. Configuration inspection does not create or
+probe these output directories.
 Per-role model, base URL, key, timeout, retry, and concurrency flags have been
 removed. Models and generation controls belong to PromptKit profiles, backend
 credentials and capacity to configuration, and retry/deadline settings to the
diff --git a/docs/config.md b/docs/config.md
index 27a89fd..015733f 100644
--- a/docs/config.md
+++ b/docs/config.md
@@ -62,17 +62,20 @@ field provenance separately from ConfigKit's redacted settings YAML.
 | `thresholds.glossary`, `.homophones`, `.spoken_word`, `.grammar` | `0.8` each | Confidence thresholds in `[0, 1]`. |
 | `context.description` | Empty | Trimmed prompt context, at most 500 bytes. |
 | `reporting.enabled` | `true` | Write the ordinary three-file report bundle when processing. |
-| `reporting.stdout_dir` | `.` | Report directory for stdout transcript output; ignored for file output or disabled reporting. |
+| `reporting.stdout_dir` | `.` | Report directory for stdout transcript output; a `--report-dir` flag can select reports for either transcript destination. |
 | `diagnostics.debug` | `false` | Persist detailed debug artifacts when processing. |
 | `diagnostics.work_dir` | `/tmp/audita` | Parent of the retained debug run directory; required only when debug is enabled. |
 
 Module keys select correction modules; validator chains remain built into them.
 The loader preserves module order and repetitions. Normalization time settings
 accept numeric seconds only. The operation timeout uses a duration string.
-`reporting.stdout_dir` must be nonblank only for reporting-enabled stdout runs;
-`diagnostics.work_dir` must be nonblank only with debug enabled. These path
-requirements are checked when choosing process destinations, not during
-configuration inspection.
+`reporting.stdout_dir` must be nonblank when it supplies the active report
+destination: for stdout output, or for file output when `--report-dir` is
+explicitly supplied. File output without that flag uses the transcript's parent,
+so the configured value is inactive. Reporting-disabled runs do not select a
+report directory. `diagnostics.work_dir` must be nonblank only with debug
+enabled. These path requirements are checked when choosing process destinations,
+not during configuration inspection.
 
 ## Credentials
 
diff --git a/docs/integrations/subprocess.md b/docs/integrations/subprocess.md
index 29ac78b..47c1a4f 100644
--- a/docs/integrations/subprocess.md
+++ b/docs/integrations/subprocess.md
@@ -9,11 +9,14 @@ The [CLI reference](../cli.md) owns command syntax, streams, and exit semantics;
 Use an argument array with the transcript path and required glossary argument,
 following the [process examples](../cli.md#commands-and-help). For machine workflows,
 select an explicit transcript file destination and a configuration path. Reports
-then go beside the transcript. For stdout output, select `--report-dir` or use
-the invocation working directory. Debug is independent and off by default.
-Supplying a configuration path also
-makes file selection predictable; only explicitly referenced credential variables
-are read from the environment.
+go beside the transcript unless an explicit `--report-dir` selects another
+directory. For stdout output, reports use the effective `reporting.stdout_dir`
+(defaulting to the invocation working directory), including a `--report-dir`
+override. A config-file or overlay value for `reporting.stdout_dir` alone does
+not redirect file-output reports. `--work-dir` selects a debug root, while
+configuration or `--debug` enables capture; the path flag alone does not.
+Supplying a configuration path also makes file selection predictable; only
+explicitly referenced credential variables are read from the environment.
 
 Resolve the executable deliberately and set the child's working directory so
 relative input/output paths and reported artifact paths have a known base.
@@ -28,7 +31,8 @@ Consume transcript/report data through the
 [output-file contract](output-files.md), and treat stderr as human-readable detail.
 The three reports may be absent after early configuration or destination
 failures. After initialization, failed reports can describe invalid input or
-partial processing. Exit `0` can include recoverable model errors and applied
+partial processing and use the same selected report directory as successful
+runs. Exit `0` can include recoverable model errors and applied
 corrections; inspect `errors.yml` and `recoveries.yml` for those outcomes. A
 transcript may have been written before a later required report failure, so
 the file alone does not prove completion.
diff --git a/docs/operations.md b/docs/operations.md
index 5a2336f..7adda89 100644
--- a/docs/operations.md
+++ b/docs/operations.md
@@ -17,10 +17,14 @@ settings, and the [output contract](integrations/output-files.md) owns schemas.
 ## Required Output Files
 
 Reporting is enabled by default. For file transcript output, `errors.yml`,
-`recoveries.yml`, and `report.md` go in the transcript output's parent directory.
-For stdout transcript output, they go in `reporting.stdout_dir` (default `.`),
-overridden by `--report-dir`. `--reporting=false` suppresses all three reports
-and removes their path requirements. It does not suppress the stderr summary or
+`recoveries.yml`, and `report.md` go in the transcript output's parent directory
+unless `--report-dir` is explicitly supplied. For stdout transcript output, they
+go in the effective `reporting.stdout_dir` (default `.`), including a
+`--report-dir` override. A config-file or overlay value for
+`reporting.stdout_dir` alone does not redirect file-output reports. An active
+selected report directory must be nonblank. `--reporting=false` suppresses all
+three reports and leaves their destination inactive, so it is not probed merely
+because `--report-dir` was supplied. It does not suppress the stderr summary or
 fatal errors. Stdout contains only transcript JSON; file output leaves it empty.
 
 Existing report directories and parents for regular transcript files must be
@@ -32,8 +36,9 @@ Preparation never truncates an existing transcript. Device and pipe destinations
 (such as `/dev/null` and named pipes) receive ordinary writes at publication time;
 they are not opened during preflight or replaced with regular files. A pipe write
 can wait for its reader, and stream write errors are fatal. With reporting enabled,
-reports still use the output path's parent; disable reporting when that placement
-is unsuitable for a stream destination.
+reports still use the output path's parent unless an explicit `--report-dir`
+selects another directory; disable reporting when that placement is unsuitable
+for a stream destination.
 
 With reporting enabled, all three reports are initialized as `in_progress` before
 input processing. Output is encoded fully before publication. Each regular output
@@ -48,10 +53,12 @@ finalized where possible. An uncatchable termination can leave `in_progress`.
 
 ## Diagnostics Directory
 
-`--debug` enables detailed evidence independently of reporting. One directory
-named `run-<id>` is created under `diagnostics.work_dir` (default `/tmp/audita`)
-and retained on success or failure. Without debug, no directory or payload
-files are created. The parent is created when needed only for debug. Failure to
+`--debug` or `diagnostics.debug` enables detailed evidence independently of
+reporting. One directory named `run-<id>` is created under
+`diagnostics.work_dir` (default `/tmp/audita`), which `--work-dir` can override,
+and retained on success or failure. Selecting `--work-dir` alone does not enable
+capture. Without debug, no directory or payload files are created. The parent
+is created when needed only for debug. Failure to
 write optional debug evidence prints a redacted stderr diagnostic but does not
 change correction decisions or the exit status.
 
diff --git a/docs/roadmap/implementation.md b/docs/roadmap/implementation.md
index 706fd68..d98ff03 100644
--- a/docs/roadmap/implementation.md
+++ b/docs/roadmap/implementation.md
@@ -1,7 +1,7 @@
 # Implementation Plan: Independent Output Destinations
 
 **Last updated:** 2026-10-03
-**Status:** Stage 1 complete; Stage 2 pending.
+**Status:** Complete; Stages 1–2 implemented and verified.
 **Audience:** gpt-5.6-terra coding agent.
 
 ## Scope and Execution
@@ -94,6 +94,9 @@ destination constraints, then commit the coherent code/test unit.
 **Files:** `cmd/audita/main_integration_test.go`, `docs/cli.md`,
 `docs/config.md`, `docs/operations.md`,
 `docs/integrations/subprocess.md`, and `docs/roadmap/narratio-feature.md`.
+
+**Completion:** Complete — the full Go test suite, maintained configuration
+examples, affected Markdown links, and whitespace checks pass.
 Touch another document only if its current statement actually conflicts with
 the new behavior.
 
diff --git a/docs/roadmap/narratio-feature.md b/docs/roadmap/narratio-feature.md
index 8c4b2f2..82bb5ae 100644
--- a/docs/roadmap/narratio-feature.md
+++ b/docs/roadmap/narratio-feature.md
@@ -2,10 +2,10 @@
 
 **Last updated:** 2026-10-03
 
-**Status:** Proposed; not implemented. This roadmap records the intended external
-behavior and the reasons for it. The [implementation plan](implementation.md)
-owns the ordered work; the [Narratio request](feature-request-narratio.md)
-provides the consumer context.
+**Status:** Implemented and verified. This roadmap records the external behavior
+and the reasons for it. The [implementation plan](implementation.md) records the
+completed work; the [Narratio request](feature-request-narratio.md) provides the
+consumer context.
 
 ## Purpose
 
@@ -21,8 +21,9 @@ working-state lifecycle; Narratio owns its destination paths and operator views.
 - `--output FILE` writes the transcript to `FILE`, or stdout when omitted.
 - Ordinary reporting is enabled by default. With file output, `errors.yml`,
   `recoveries.yml`, and `report.md` go beside the transcript. With stdout output,
-  `--report-dir DIR` or `reporting.stdout_dir` selects their directory. The
-  current selection logic ignores `--report-dir` when `--output` is supplied.
+  `--report-dir DIR` or `reporting.stdout_dir` selects their directory. An
+  explicit `--report-dir` also selects reports for file output; without it, the
+  configured `reporting.stdout_dir` value remains stdout-only.
 - Reports are initialized before input processing, then updated on completion or
   failure where possible. Early configuration or destination failures can occur
   before report initialization and therefore leave no report files.
@@ -30,10 +31,10 @@ working-state lifecycle; Narratio owns its destination paths and operator views.
   enable debug capture. Capture is enabled by `diagnostics.debug` or an explicit
   `--debug`; when enabled, Audita retains a `run-<id>` directory beneath the
   selected root. Debug remains optional, including after unsuccessful runs.
-- The output session already receives distinct transcript and report paths and
-  checks active destinations for conflicts with each other and protected inputs.
-  The limitation is primarily in CLI report-directory selection, not in report
-  encoding or the output session's basic shape.
+- The output session receives distinct transcript and report paths and checks
+  active destinations for conflicts with each other and protected inputs. The
+  CLI selects the report destination while the output session retains its
+  existing collision checks, preflight, initialization, and finalization.
 
 The current contracts are in [CLI](../cli.md), [configuration](../config.md),
 [operations](../operations.md), [subprocess guidance](../integrations/subprocess.md),
diff --git a/internal/cli/config_input_test.go b/internal/cli/config_input_test.go
index fba092a..7b19f41 100644
--- a/internal/cli/config_input_test.go
+++ b/internal/cli/config_input_test.go
@@ -215,6 +215,17 @@ func TestReportingAndDebugOverridesRemainIndependent(t *testing.T) {
 			t.Fatalf("%s did not honor explicit false: %+v", command, selected.Result.Config)
 		}
 	}
+	processInput, _, err := parseConfigInput("process", []string{"input.json", "--glossary", "glossary.yml", "--config", main, "--overlay", "testing"}, io.Discard)
+	if err != nil {
+		t.Fatal(err)
+	}
+	processConfig, err := loadConfigInput(processInput, "process")
+	if err != nil {
+		t.Fatal(err)
+	}
+	if got, err := selectedReportDir(processConfig.Result.Config, filepath.Join("out", "corrected.json"), processInput.ReportDirSet); err != nil || got != "out" {
+		t.Fatalf("overlay stdout directory redirected file output: %q %v", got, err)
+	}
 }
 
 func TestReportDirectorySelectionOnlyUsesActiveDestination(t *testing.T) {