A Wales Audit Office (WAO) report said the authority had  recognised it needed a "fundamental culture change" to deliver its services and was developing a new strategy.
The council has been told to produce an action plan to address "weaknesses".
Leader Jamie Adams said he accepted the corporate assessment report findings.
Auditor General for Wales, Huw Vaughan Thomas, said: "The council now needs to focus on putting robust arrangements in place which will help it to deliver its priorities and improved outcomes for the citizens of Pembrokeshire."
Mr Adams said the report was a "true picture" of the authority's position in April, when WAO officials visited, and the full council would be discussing a new constitution later this week.
He added: "We are pleased that the report acknowledges that we have made improvements in certain key areas and also in our overall performance.
"We are under no illusions though of the scale of the work ahead of us at a time when our funding is being severely constrained by economic pressures."
There is "considerable scope" for Pembrokeshire council to improve its financial planning, management and decision making, auditors have said.