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The test uses fn:floor($x), but "fn" is undeclared. This is not allowed.
Note that this test also declares an (unused) parameter which binds to a non-existing function (arity mismatch): <xsl:variable name="roundToCeiling" select="local:round(?, upper-case#1)"/>
Fixed in current revision as suggested in comment#0 and comment#1.
I agree with this analysis.