SC : Pronoun-verb agreement vs ambiguity

[AJJ837]

Good Morning!

I was going through Foundations of Verbal and I found drill 2.4 to be really helpful. One particular question got me thinking. Please see below.

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Is the sentence below CORRECT OR INCORRECT?
[b]
The data contained in the report by the outside auditor establish unequivocally that the CEO committed fraud; in fact it is so damning that he has agreed to resign and pay the money immediately.[/b]

I got the right answer to this question (the sentence is incorrect). However, the reason I thought the sentence was incorrect in it's original form is slightly different to the explanation in the book (I understand the explanation fully, but I'm trying to understand if my reasoning is also valid). My reason was because it wasn't clear what the pronoun "it" was referring to in the second part of the sentence. I thought that 'it' could be referring to "fraud" or "data", and because of that ambiguity the sentence is incorrect.

I am now trying to understand when ambiguity starts to come into play in a sentence, incase I need to use it to rule out an answer choice. When is it appropriate to say that a sentence is flawed because of a pronoun ambiguity? Did I use it correctly in my reasoning above? Also, could "it" (as used in the sentence) possibly be referring to "fraud", based on the rules of the English language? Maybe after a semi-colon, the first pronoun must refer to the subject of the first part of the sentence?

Thanks so much

[Sage Pearce-Higgins]

Pronoun ambiguity is a tricky area, and perhaps one real 'gray area' in the GMAT. I would encourage you to look at the chapter in the SC strategy guide on pronouns, as well as to watch the Interact session on that topic. It's quite possible for a sentence to have multiple nouns (and multiple pronouns) if the meaning is clear.

In this case, 'it' could not refer to fraud, as it's not possible for fraud to be damning.