This research aims to investigate whether Accountability has a role on the association between Fiscal Decentralization as well as Audit findings with Performance of local government in Indonesia.  The effect of Fiscal decentralization on Performance could be positive since Local Government has better knowledge about the local potential and needs (Lemmon and Ross, 2014). On the other hand, it also provides higher opportunity to corrupt (Liu, 2007; Tanzi, 1996; Ekasani, 2016). Hence, accountability is hypothesized as mediating variable which controls power discretion and prevent power abuse by executives. In addition, this research hypothesized that Audit findings have negative effect on Performance through Accountability. Using 720 entities years of Local Government data covering the period of 2011 and 2012, this research uses Structural Equation Modeling statistical techniques to test the hypotheses. Empirical suggest that previous year’s Accountability has mediating role on the positive association between Fiscal Decentralization and Performance, and also on the negative associations between Audit findings and Performance.