is anyone aware of whether this requirement can be waived in the event of the insolvency of the plan sponsor?

Plan can pay the expense since it is part of the Form 5500 requirement.

they dont want to have it done at all since there is no company left due to the insolvency.

They can always write to the DOL and ask for a waiver. In a case like this the DOL might even want to do an investigation!

why would they want an investigation? maybe thats your attempt at humor. if it is don't give up your day job.

Not an attempt at humor. If the DOL finds an existing plan with an insolvent sponsor, they will frequently initiate an investigation to make sure the assets and participants have not been adversely affected by the insolvency.

k man, the point in this post was valid... if the company itself doesn't have the money to pay for the audit, then the fee can be allocated amongst the plan participants' accounts (assuming its a DC plan, or DB can go directly against plan assets). However review your plan document before doing this to see how it says expenses will be paid; depending on what it says, an amendment might be in order.