This paper uses a randomized field experiment to examine approaches to reducing corruption in Indonesia. It measures missing expenditures in over 600 village road projects by having engineers estimate the prices and quantities of all inputs used in each road and comparing these estimates to villages' official expenditure reports. The study finds that increasing the probability of a government audit from 4% to 100% reduced missing expenditures by about 8 percentage points, making audits cost-effective. In contrast, increasing grass-roots participation in monitoring only reduced missing wages, with no effect on missing materials expenditures. Since materials account for three-quarters of total expenditures, grass-roots participation had little overall impact. The findings suggest that grass-roots monitoring may be subject to free-rider problems. Overall, the results suggest that traditional top-down monitoring can play an important role in reducing corruption, even in a highly corrupt environment. The study was conducted in 608 Indonesian villages, with each village about to start building a village road as part of a nationwide infrastructure project. To examine the impact of external monitoring, some villages were told that their project would be audited by the central government audit agency, increasing the probability of an audit from 4% to 100%. To investigate the impact of increasing community participation, two experiments were conducted: one involved distributing invitations to accountability meetings to encourage participation, and the other involved distributing anonymous comment forms to allow villagers to relay information about the project without fear of retaliation. Both interventions increased grass-roots participation, but had small and statistically insignificant effects on overall missing expenditures. The study found that the audit experiment significantly reduced missing expenditures, particularly in villages where the village head was up for re-election and where the previous election results suggested that the upcoming election would be close. This suggests that external monitoring and democratic accountability may be complements. The participation experiments, however, had smaller and statistically insignificant effects on overall missing expenditures. The small overall effects of the participation experiments on overall missing expenditures masked substantial differences across types of expenditures. The invitations treatment substantially reduced missing labor expenditures but had no effect on missing materials expenditures. Since materials account for about three-quarters of total expenditures, the average impact was small and statistically insignificant. The study also found that the number of project jobs given to family members of project officials actually increased in response to the audits, suggesting that alternative forms of corruption may be substitutes. The results suggest that audits were highly cost-effective. The study concludes that traditional top-down monitoring can play an important role in reducing corruption, even in a highly corrupt environment.This paper uses a randomized field experiment to examine approaches to reducing corruption in Indonesia. It measures missing expenditures in over 600 village road projects by having engineers estimate the prices and quantities of all inputs used in each road and comparing these estimates to villages' official expenditure reports. The study finds that increasing the probability of a government audit from 4% to 100% reduced missing expenditures by about 8 percentage points, making audits cost-effective. In contrast, increasing grass-roots participation in monitoring only reduced missing wages, with no effect on missing materials expenditures. Since materials account for three-quarters of total expenditures, grass-roots participation had little overall impact. The findings suggest that grass-roots monitoring may be subject to free-rider problems. Overall, the results suggest that traditional top-down monitoring can play an important role in reducing corruption, even in a highly corrupt environment. The study was conducted in 608 Indonesian villages, with each village about to start building a village road as part of a nationwide infrastructure project. To examine the impact of external monitoring, some villages were told that their project would be audited by the central government audit agency, increasing the probability of an audit from 4% to 100%. To investigate the impact of increasing community participation, two experiments were conducted: one involved distributing invitations to accountability meetings to encourage participation, and the other involved distributing anonymous comment forms to allow villagers to relay information about the project without fear of retaliation. Both interventions increased grass-roots participation, but had small and statistically insignificant effects on overall missing expenditures. The study found that the audit experiment significantly reduced missing expenditures, particularly in villages where the village head was up for re-election and where the previous election results suggested that the upcoming election would be close. This suggests that external monitoring and democratic accountability may be complements. The participation experiments, however, had smaller and statistically insignificant effects on overall missing expenditures. The small overall effects of the participation experiments on overall missing expenditures masked substantial differences across types of expenditures. The invitations treatment substantially reduced missing labor expenditures but had no effect on missing materials expenditures. Since materials account for about three-quarters of total expenditures, the average impact was small and statistically insignificant. The study also found that the number of project jobs given to family members of project officials actually increased in response to the audits, suggesting that alternative forms of corruption may be substitutes. The results suggest that audits were highly cost-effective. The study concludes that traditional top-down monitoring can play an important role in reducing corruption, even in a highly corrupt environment.