We show that the separation of the fiscal and audit offices of China’s province-level governments leads to high fiscal disclosure quality, an effect that is more pronounced when the political rank of the official in charge of auditing is higher than that of the official in charge of fiscal matters. Dynamically, disclosure quality decreases when fiscal office and audit office go from being separated to being integrated and improves when they go from being integrated to being separated. Finally, fiscal disclosure quality reduces the cost of debt and improves credit ratings of municipal investment and development bonds. We demonstrate an aspect of China’s governance that, even without adequate monitoring from the oppositions or the media, local governments can improve efficiency via horizontal separations of fiscal and audit offices.