Also, keep in mind that many views just "do the right thing" as far as accessibility goes. Buttons for example will use their title as the default accessibility label if you don't set one explicitly.
It should report errors automatically. For the most part, it will detect problems automatically because a step will fail to execute. The reason is reported in the log that KIF creates. For example, if you had steps to
(1) enter the user name
(2) enter the password
(3) click "sign in"
(4) hit the refresh button
If the login failed for some reason, then step (4) would fail because it wouldn't be able to find the refresh button.
You can also add explicit verification steps, such as "wait for the view with the accessibility label 'Refresh'" if you want further validation.