Which of the following statements is false concerning the periodic evaluation of internal controls?

The statement that "none of the above" is the correct response because it implies that all the provided statements about the periodic evaluation of internal controls are true.

Each of the statements accurately reflects key principles in internal control evaluation:

• The first statement emphasizes the importance of having compensating controls for identified risks. This ensures that the absence or failure of a primary control does not leave the organization vulnerable, thus maintaining the integrity of the internal control system.

• The second statement highlights the necessity of evaluating the design of controls prior to testing them. Properly designed controls are pivotal for effective operation; understanding the design allows evaluators to determine whether the controls are adequate before assessing their performance.

• The third statement explains that if a control is not functioning correctly, it might be appropriate to eliminate it altogether. This is a sound approach as ineffective controls can create confusion and may not only fail to mitigate risks but potentially introduce new risks instead.

Therefore, since all the statements accurately represent principles of evaluating internal controls, the answer that "none of the above" is false is indeed valid.