XSLT Group by using 3 different elements from different node level

I'm new to XSLT, for the below XML, I'm trying to implement this transformation logic: If <wd:candidate>,<wd:CF_LRV_Requisition_ID> and <wd:Stage> have the same combination of values, then sort using <wd:Last_Functionally_Updated> and only output the most recent one.

To achieve this, I'm trying to group 3 elements first: <wd:candidate>, <wd:CF_LRV_Requisition_ID>, and <wd:Stage>. I have no problem grouping <wd:candidate>, <wd:CF_LRV_Requisition_ID>, but <wd:Stage> is from a different node "<wd:Job_Application_Process_Statuses_group>" and that's where I encountered problems.

Below is the test XML file

<?xml version='1.0' encoding='UTF-8'?>
<wd:Report_Data xmlns:wd="urn:com.workday.report/AS_TEST_Job_Application">
    <wd:Report_Entry>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2022-03-14T02:02:07.778-07:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Review">
                <wd:ID wd:type="WID">31350d72f899430fb446b410c1e368cd</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">REVIEW</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:candidate>C-0000000001</wd:candidate>
        <wd:CF_LRV_Requisition_ID>R-0000000412</wd:CF_LRV_Requisition_ID>
    </wd:Report_Entry>
    <wd:Report_Entry>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2022-04-08T08:12:00.622-07:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Review">
                <wd:ID wd:type="WID">31350d72f899430fb446b410c1e368cd</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">REVIEW</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2022-04-08T08:12:00.622-07:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Rejected">
                <wd:ID wd:type="WID">9a35fa5882c24620a777de1dbcf34d3c</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">REJECTED</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:candidate>C-0000000089</wd:candidate>
        <wd:CF_LRV_Requisition_ID>R-0000000528</wd:CF_LRV_Requisition_ID>
    </wd:Report_Entry>
    <wd:Report_Entry>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2022-03-17T12:06:51.499-07:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Review">
                <wd:ID wd:type="WID">31350d72f899430fb446b410c1e368cd</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">REVIEW</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2022-03-22T12:23:48.080-07:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Review">
                <wd:ID wd:type="WID">31350d72f899430fb446b410c1e368cd</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">REVIEW</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2022-03-24T14:21:08.613-07:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Review">
                <wd:ID wd:type="WID">31350d72f899430fb446b410c1e368cd</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">REVIEW</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2022-03-28T15:12:33.101-07:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Review">
                <wd:ID wd:type="WID">31350d72f899430fb446b410c1e368cd</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">REVIEW</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2022-04-04T11:15:39.337-07:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Interview">
                <wd:ID wd:type="WID">3317e4265cf94b91873b7015881a0e9c</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">INTERVIEW</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2022-04-07T11:01:59.639-07:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Offer">
                <wd:ID wd:type="WID">868a8156682541f2aadc2fe90268b75f</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">OFFER</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2022-05-13T10:39:08.947-07:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Background Check">
                <wd:ID wd:type="WID">be56571f9f6f45ca82871c8bec853f5e</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">BACKGROUND</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2022-05-13T10:39:08.947-07:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Ready for Hire">
                <wd:ID wd:type="WID">edd55803e2ec49c3a6eb01daadfc9bf9</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">HIRED</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:candidate>C-0000000119</wd:candidate>
        <wd:CF_LRV_Requisition_ID>R-0000005173</wd:CF_LRV_Requisition_ID>
    </wd:Report_Entry>
    <wd:Report_Entry>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2022-04-08T08:12:00.622-07:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Review">
                <wd:ID wd:type="WID">31350d72f899430fb446b410c1e368cd</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">REVIEW</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2022-04-08T08:12:00.622-07:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Rejected">
                <wd:ID wd:type="WID">9a35fa5882c24620a777de1dbcf34d3c</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">REJECTED</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:candidate>C-0000000051</wd:candidate>
        <wd:CF_LRV_Requisition_ID>R-0000000528</wd:CF_LRV_Requisition_ID>
    </wd:Report_Entry>
    <wd:Report_Entry>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2022-06-28T11:07:50.328-07:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Review">
                <wd:ID wd:type="WID">31350d72f899430fb446b410c1e368cd</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">REVIEW</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2022-07-26T10:11:23.868-07:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Screen">
                <wd:ID wd:type="WID">2d0e4a68825d4d2a8c507af7542d3f15</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">SCREEN</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2022-07-26T10:11:23.868-07:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Rejected">
                <wd:ID wd:type="WID">9a35fa5882c24620a777de1dbcf34d3c</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">REJECTED</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:candidate>C-0000000051</wd:candidate>
        <wd:CF_LRV_Requisition_ID>R-0000000549</wd:CF_LRV_Requisition_ID>
    </wd:Report_Entry>
    <wd:Report_Entry>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2024-12-18T05:40:39.473-08:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Review">
                <wd:ID wd:type="WID">31350d72f899430fb446b410c1e368cd</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">REVIEW</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2024-12-18T05:40:56.234-08:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Screen">
                <wd:ID wd:type="WID">2d0e4a68825d4d2a8c507af7542d3f15</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">SCREEN</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2024-12-18T05:41:12.816-08:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Review">
                <wd:ID wd:type="WID">31350d72f899430fb446b410c1e368cd</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">REVIEW</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2024-12-18T05:41:30.312-08:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Assessment">
                <wd:ID wd:type="WID">bb01594c858710000e4d46d2b7220034</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">ASSESSMENT</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2024-12-18T05:41:51.302-08:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Review">
                <wd:ID wd:type="WID">31350d72f899430fb446b410c1e368cd</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">REVIEW</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2024-12-18T05:42:10.857-08:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Interview">
                <wd:ID wd:type="WID">3317e4265cf94b91873b7015881a0e9c</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">INTERVIEW</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2024-12-18T05:46:07.095-08:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Offer (Employment Agreement)">
                <wd:ID wd:type="WID">1d57fbe8504d100015945d2b2704006a</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">EMPLOYMENT_AGREEMENT</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2024-12-18T05:47:24.651-08:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Background Check">
                <wd:ID wd:type="WID">be56571f9f6f45ca82871c8bec853f5e</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">BACKGROUND</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2024-12-18T05:47:24.651-08:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Ready for Hire">
                <wd:ID wd:type="WID">edd55803e2ec49c3a6eb01daadfc9bf9</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">HIRED</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:candidate>C-0001721064</wd:candidate>
        <wd:CF_LRV_Requisition_ID>R-0000106401</wd:CF_LRV_Requisition_ID>
    </wd:Report_Entry>
    <wd:Report_Entry>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2024-12-18T05:50:50.192-08:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Review">
                <wd:ID wd:type="WID">31350d72f899430fb446b410c1e368cd</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">REVIEW</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2024-12-18T05:51:21.591-08:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Screen">
                <wd:ID wd:type="WID">2d0e4a68825d4d2a8c507af7542d3f15</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">SCREEN</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2024-12-18T05:51:46.584-08:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Assessment">
                <wd:ID wd:type="WID">bb01594c858710000e4d46d2b7220034</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">ASSESSMENT</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2024-12-18T05:52:16.212-08:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Review">
                <wd:ID wd:type="WID">31350d72f899430fb446b410c1e368cd</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">REVIEW</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2024-12-18T05:52:46.050-08:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Screen">
                <wd:ID wd:type="WID">2d0e4a68825d4d2a8c507af7542d3f15</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">SCREEN</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2024-12-18T05:53:13.106-08:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Assessment">
                <wd:ID wd:type="WID">bb01594c858710000e4d46d2b7220034</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">ASSESSMENT</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2024-12-18T05:53:38.669-08:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Interview">
                <wd:ID wd:type="WID">3317e4265cf94b91873b7015881a0e9c</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">INTERVIEW</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2024-12-18T05:58:00.444-08:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Offer (Employment Agreement)">
                <wd:ID wd:type="WID">1d57fbe8504d100015945d2b2704006a</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">EMPLOYMENT_AGREEMENT</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2024-12-18T06:00:15.762-08:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Background Check">
                <wd:ID wd:type="WID">be56571f9f6f45ca82871c8bec853f5e</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">BACKGROUND</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:Job_Application_Process_Statuses_group>
            <wd:Last_Functionally_Updated>2024-12-18T06:00:15.762-08:00</wd:Last_Functionally_Updated>
            <wd:Stage wd:Descriptor="Declined by Candidate">
                <wd:ID wd:type="WID">6ceb443402a444b49c9e3060c9daeaeb</wd:ID>
                <wd:ID wd:type="Recruiting_Stage_ID">DECLINED</wd:ID>
            </wd:Stage>
        </wd:Job_Application_Process_Statuses_group>
        <wd:candidate>C-0001721065</wd:candidate>
        <wd:CF_LRV_Requisition_ID>R-0000106401</wd:CF_LRV_Requisition_ID>
    </wd:Report_Entry>
</wd:Report_Data>

below is the XSLT using:

<?xml version="1.0" encoding="UTF-8"?>
<xsl:stylesheet version="2.0" xmlns:xsl="http://www.w3.org/1999/XSL/Transform"
    xmlns:xs="http://www.w3.org/2001/XMLSchema"
    xmlns:wd="urn:com.workday.report/AS_TEST_Job_Application"
    exclude-result-prefixes="wd">
    
    <xsl:output method="text" omit-xml-declaration="no"/>
    
    <xsl:key name="recordKey" match="wd:Report_Entry" use="concat(wd:Stage/@wd:Descriptor, '-', wd:candidate, '-', wd:CF_LRV_Requisition_ID)"/>
    <xsl:variable name="RECORD-DELIMITER">
        <xsl:text>&#xd;&#xa;</xsl:text>
    </xsl:variable>
    <xsl:param name="Dilim">","</xsl:param>
    <xsl:param name="Quote">"</xsl:param>
    <xsl:param name="Comma">,</xsl:param>
    <xsl:variable name="FIELD-DELIMITER">
        <xsl:value-of select="$Dilim"/>
    </xsl:variable>
    <xsl:variable name="STARTING-QUOTE">
        <xsl:value-of select="$Quote"/>
    </xsl:variable>
    
    <xsl:template match="wd:Report_Data">
        <Header>
            <HeaderItem1>"time_stamp"</HeaderItem1>
            <xsl:value-of select="$Comma"/>
            <HeaderItem2>"event"</HeaderItem2>
            <xsl:value-of select="$Comma"/>
            <HeaderItem3>"applyflow_id"</HeaderItem3>
            <xsl:value-of select="$Comma"/>
            <HeaderItem4>"job_id"</HeaderItem4>
        </Header>
        <xsl:value-of select="$RECORD-DELIMITER"/>

        <xsl:for-each-group select="wd:Report_Entry" group-by="concat(wd:candidate, '|', wd:CF_LRV_Requisition_ID, '|', wd:Job_Application_Process_Statuses_group/wd:Stage/wd:ID)">
            
            <xsl:for-each select="current-group()[1]">
                <xsl:value-of select="$STARTING-QUOTE"/>
                    <time_stamp>
                        <xsl:value-of select="current-group()[1]/wd:Job_Application_Process_Statuses_group/wd:Last_Functionally_Updated"/>
                    </time_stamp>
                <xsl:value-of select="$FIELD-DELIMITER"/>
                     <event>
                         <xsl:value-of select="current-group()[1]/wd:Job_Application_Process_Statuses_group/wd:Stage/@wd:Descriptor"/>
                     </event>
                <xsl:value-of select="$FIELD-DELIMITER"/>
                    <applyflow_id>
                        <xsl:value-of select="current-group()[1]/wd:candidate"/>
                    </applyflow_id>  
                <xsl:value-of select="$FIELD-DELIMITER"/>
                    <job_id>
                        <xsl:value-of select="current-group()[1]/wd:CF_LRV_Requisition_ID"/>
                    </job_id>
                <xsl:value-of select="$STARTING-QUOTE"/>
                <xsl:value-of select="$RECORD-DELIMITER"/>
            </xsl:for-each>
        </xsl:for-each-group>
    </xsl:template>
</xsl:stylesheet>

I tried to group the three fields using <xsl:for-each-group select="wd:Report_Entry" group-by="concat(wd:candidate, '|', wd:CF_LRV_Requisition_ID, '|', wd:Job_Application_Process_Statuses_group/wd:Stage/wd:ID)">, but the xslt simply didn't run

Your requirement is difficult to understand as Report_Entrys have sometimes several Job_Application_Process_Statuses_group children so on which elements you want to group is not clear and furthermore Stage elements seem to have to ID children where it is also not clear which one or ones you want to use for grouping.

Your current code also does no sorting although your textual description mentions sorting.

To give you an (XSLT 3) example of grouping and sorting the Job_Application_Process_Statuses_group elements with a composite grouping key ../candidate, ../CF_LRV_Requisition_ID , Stage/ID and then sorting each group and process only the last element in sort order see

<?xml version="1.0" encoding="utf-8"?>
<xsl:stylesheet xmlns:xsl="http://www.w3.org/1999/XSL/Transform"
  version="3.0"
  xmlns:xs="http://www.w3.org/2001/XMLSchema"
  exclude-result-prefixes="#all"
  xpath-default-namespace="urn:com.workday.report/AS_TEST_Job_Application"
  expand-text="yes">

  <xsl:output method="xml" indent="yes"/>

  <xsl:mode on-no-match="shallow-skip"/>
  
  <xsl:template match="Report_Data">
    <xsl:for-each-group select="Report_Entry/Job_Application_Process_Statuses_group" composite="yes" group-by="../candidate, ../CF_LRV_Requisition_ID , Stage/ID">
      <xsl:apply-templates select="(current-group() => sort((), function($j) { $j/Last_Functionally_Updated }))[last()]"/>
    </xsl:for-each-group>
  </xsl:template>
  
  <xsl:template match="Job_Application_Process_Statuses_group">
    <xsl:comment>{current-grouping-key()}</xsl:comment>
    <xsl:sequence select="."/>
  </xsl:template>

</xsl:stylesheet>

I have output the grouping key in a comment to identify which element from the input is output for a group, I get the result shown below, decide for yourself whether that has the grouping and sorting you need and adapt to your needs if needed.

<?xml version="1.0" encoding="UTF-8"?>
<!--C-0000000001 R-0000000412 31350d72f899430fb446b410c1e368cd REVIEW-->
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