Pembroke Park raises fixed-asset threshold to $5,000 to reduce audit burden

The Town of Pembroke Park on Feb. 18 voted to adopt a fixed-asset management standard operating procedure that raises the capitalization threshold from $250 to $5,000.

The finance director recommended the change to reduce administrative burden and better align the town with generally accepted accounting principals and GASB practice. "I recommend that the town refresh its fixed assets policy, to a minimum of $5,000," the finance director said, explaining that most municipalities set capitalization thresholds between $5,000 and $20,000 and that auditors favor a higher threshold for materiality and testing efficiency.

Commissioners debated the timing of the change amid concerns about recent finance problems that had exposed the town to audit findings and an earlier $950,000 error referenced during discussion. Mayor Jacobs and others warned that the department is under scrutiny and that changes to financial procedure should be considered carefully under current circumstances.

Despite those concerns, the commission approved Resolution 2026010 by roll call; Mayor Jacobs recorded a dissenting vote. The approved policy will limit auditor testing to assets valued at $5,000 or more and allow smaller items to be expensed and tracked internally by departments.

The finance director said implementation would not alter procurement procedures but would change the accounting treatment for low-value, rapidly depreciating items. Commissioners indicated they would work with auditors and staff to ensure appropriate controls and transparency going forward.