Historical corrections for 5500's & late 401k

[TPApril]

Plan is a mess.

5 years ago, while dealing w/downturn, company released auditor & TPA as they wanted to maintain plan but needed to reduce costs. For 1st 2 yrs count was btwn 100-120, so they filed as large but no audit. They then went < 100. All this time, they reported no delinquent 401(k) contributions, in spite, as we have found, many.

They want in good faith to clean up the plan, pay lost earnings, submit VFCP, amend last 3 year 5500's (small plan years). But they refuse to pay for auditor to audit those 2 years (2011-2012). We have explained that the VFCP will include those years and we've explained risks. Just contemplating next steps but wondering if anyone has any thoughts.