This paper takes the pilot reform of personnel and property management of audit institutions under the provincial level implemented at the end of 2015 as A quasi-natural experiment, selects A-share local state-owned enterprises in Shanghai and Shenzhen from 2011 to 2020 as research samples, and uses the differences in differences model to test the effect of local audit management system reform on the financial asset allocation of local state-owned enterprises. The results show that: The reform of local audit management system can significantly reduce the scale of financial asset allocation of local state-owned enterprises. By classifying financial asset classes, it is found that the reform has an obvious effect on the scale of explicit financial assets, but has no obvious effect on the scale of hidden financial assets allocation. Further research shows that the stronger the reform of local audit management system and the stronger the audit intensity of local audit institutions, the more obvious the inhibitory effect of government audit on corporate financial asset allocation. Mechanism analysis shows that the reform of local audit management system reduces the scale of financial asset allocation of local state-owned enterprises by regulating government intervention, and the inhibition effect is more obvious in regions with greater financial pressure.