The increasing regulatory burden, risk management pressures and concerns that annual reports are not "understandable" are major worries for audit committee members.
The KPMG Global Audit Committee Survey 2012 shows that the majority of audit committee members are concerned about companies' risk management processes and believe they need 'substantial work'.
In light of possible audit reform, however, three out of four companies said that mandatory auditor rotation would not improve audit quality.
The quality of audit work is a priority for the majority of UK companies, with 86% of companies carrying out an annual evaluation of their external auditor's work.
While satisfaction with the quality of external audit was high at 86%, there were more mixed views on internal audit. In the UK, only 48% of respondents said they are fully satisfied that internal audit delivers the value to the organisation that it should, and a third (32%) said that the internal audit plan could more effectively focus on critical risks to the enterprise.
Timothy Copnell, chairman of KPMG's UK Audit Committee Institute, said: 'Audit effectiveness and understanding the assumptions underlying the material accounting judgments and estimates should be fundamental to both the board and the audit committee; and certainly to the interests of shareholders.
'So why are they in danger of slipping under the net? One would hope issues like this are being identified through the board and audit committee's own effectiveness evaluation processes and appropriately addressed.'
With the UK Competition Commission set to deliver the findings of an 18-month investigation into the audit market and mandatory rotation being considered by the EU, four out of five (58%) UK respondents said that they did not believe that mandatory auditor rotation would improve audit quality, slightly higher than the European average of 73%.However, only 42% of UK respondents said that mandatory retendering of audit contracts would improve audit quality.
Meanwhile, anti-bribery laws have become a significant area of attention with over three quarters of UK audit committee members saying that they have increased their focus on the issue in the past year.
The full report can be downloaded from KPMG