This study contributes to the health governance discussion by presenting a new data set that allows for comparisons of the management of health resources among Brazilian municipalities. Research on Brazil is particularly important as the provision of health services was decentralized in 1988 and since then municipalities have been given greater responsibilities for the management of fiscal resources for public health service provision. Based on detailed information on corruption practices (such as over-invoicing, illegal procurement and fake receipts) from audit reports of health programmes in 980 randomly selected Brazilian municipalities, this study deepens understanding of the relationship between health governance institutions and the incidence of corruption at the local level by exploring the extent to which horizontal and vertical accountabilities contribute to reducing the propensity of municipal government officials to divert public health resources for private gain. The results of our multiple regression analysis suggest that the experience of health municipal councils is correlated with reductions in the incidence of corruption in public health programmes. This impact is significant over time, with each additional year of health council experience reducing corruption incidence levels by 2.1% from baseline values. The findings reported in this study do not rely on the subjectivity of corruption measures which usually conflate the actual incidence of corruption with its perception by informants. Based on our results, we provide recommendations that can assist policy makers to reduce corruption.