Evaluating the Impact of Brazil's Central Audit Program on Municipal Provision of Health Services

We evaluate the success of Brazil's Corregedoria-Geral da União's (CGU) anti-corruption program in fostering better outcomes in the health sector using panel data from 5560 Brazilian municipalities over the period from 2000 to 2011. Since 2003, the program has randomly selected municipalities to be investigated each year, and immediately disclosed its findings. We examine two mechanisms through which this program could matter: a deterrent effect whereby municipalities react to the threat of being audited, and an auditing effect, whereby municipalities change behavior only when actually audited. A regression discontinuity approach on four outcomes likely to react quickly to corruption changes finds no improvement due to the deterrent or auditing effect, while difference-in-difference models suggest statistically significant but a small short-run effect of actually being audited on the infant mortality rate. Overall, we do not find any meaningful effect of the anticorruption audit program on the health indicators studied