The　high　level　of　local　government　debt　surged　during　the　past　years　and　became　a　serious　policy　concern　in　China.　This　paper　provides　evidence　supporting　the　positive　effect　of　local　government　audits　on　municipal　debt　risk.　Using　the　2015　audit　reform　in　China　as　a　shock　to　the　indepen-dence　of　local　government　auditors,　we　find　that　audits　significantly　decrease　local　government　over-debts.　The　effect　is　more　pronounced　when　local　officials　face　stronger　promotion　motiva-tion　and　severer　soft　budget　constraints.　Further,　the　role　of　local　government　audits　in　mitigating　municipal　debt　risk　depends　on　the　legal　environment　and　provincial　government　bureaucracies.