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I am looking for some confirmation on my understanding of the information message Spatial Reference Does Not Match that I receive when starting an edit session. I have been told by so many that you can ignore it in most cases; however, I have done research that has indicated that there is a danger when editing data that is projected, and has a different coordinate system than the data frame, so I want to make sure that I have not been incorrect all along. The coordinate system of my data frame is almost always set to the regional State Plane projected coordinate system, as well as the new shapefiles I create. I have always thought that as long as the layer you are editing has the same geographic coordinate system as the data frame, your edits will be accurate because even though State Plane is a projected coordinate system, it is based on the same datum. In regards to ignoring the message, I believe it can be accurately ignored as long as the layer you are editing is not in the list of layers whose spatial reference do not match (i.e. some statewide or nationwide datasets that likely have a different coordiante system than my project-level data). Can anyone confirm or deny my thoughts so I can have greater confidence?

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There are two issues when editing with different coordinate systems in ArcGIS.

The first issue is the one that you probably have in mind: if your coordinate systems do not use the same datum, ArcGIS might reproject your data on the fly without transforming the geographic coordiantes from one datum to the other datum. You can check in the properties of your dataframe that the datum is transformed to avoid incorrect position of a point (the transform could be (slightly) inaccurate, but for most application it doesn't matter). If you enter the absolute position of a point and you use the same datum as in the dataframe, your edit will thus be accurate. With different datums, the accuracy ranges from 0.1 to 5 m for the most common cases)

The second issue is due to the projection process, which map a 3D surface on a plane and hence distorts its geometry. There are different types of projections with different properties (equal area, equidistant, conformal) but there is no projection that includes all the properties. This means that the relative positions (angle/distance from an existing point) could change depending on your projected coordiante system. For example, an angle of 90° in a given projection could be of a different values in another projection. If you want locally accurate angles you should work in a conformal coordiante system. If you work with small objects (e.g. a house), you will barely see the difference, but it will become larger for larger objects. For large polygons, you should also make sure that you densify your lines because the projection is only applied to the points (straight lines between points remain as straight lines between points after the projection).

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