Hi
cchu92,
Thank you for your query.

This question doesn't actually violate the rule that the intended meaning should be retained in the correct answer. Let's take a detailed look at it to understand it better.
Meaning AnalysisThis sentence states a conditional statement using the “if-then” construction. If certain expenditures are reduced even further, then reports will diminish in number and quality. This has happened in the past as well, and that is why it is safe to say that the reports will continue to diminish in number and quality.
Error AnalysisThis choice has 2 errors:
1:
Conditional Verb Tense Error – First of all the verb “have been... to diminish” is incorrect. Secondly in this if..then construction, use of “have been diminished” is incorrect. Only simple present and simple future tense are allowed in this construction in the “then” clause.
2:
Redundancy Error – The use of “have been diminished” is redundant since the word “continue” expresses this meaning effectively.
Process of EliminationChoice B – The error in this choice is similar to the one in choice A. The only difference is that the verb here is "have diminished" instead of "have been to diminish".
Choice C – Redundancy error as in choice A. The expression “as they already did” is redundant, since “continue” expresses the intended continued diminishing of the quality of reports.
Choice D – Same error as in Choice C.
Choice E – No errors.
Thus, Choice E is the correct answer.
What does this question test?This question tests your ability to identify and remove redundant expressions in a sentence. It uses the conditional verb construction “if + present tense, then + simple future tense”.
What are the key take-aways from this question?1) The sentence should be concise. Redundant use of words/expressions must be avoided.
2) When the 'if' clause has the simple present tense, the 'then' clause can only have the simple present tense or the simple future tense.
Where can you find more information?In
e-GMAT's Sentence Correction Free Trial, look at the “Conditional Verb” concept in Level 2 to learn more about allowable tenses in conditional statements.
I hope this helps!

Regards,
Meghna