Honestly, this depends on how good your auditors are - some of this is "for show" and/or someone important may take them all for a nice lunch/dinner and it will all wash over.
Either way - try to get this "sharing a password is OK" nonsense in an email from whoever told you it's OK, if it ever comes down to it at least you can't be blamed that this was your "great idea"
They can still find plenty of ways to nail you for it, or depending on how much your audit snowballs, you may want to look for another job.
Personally, I would never want to be in this situation and would have left already. ...but I understand not everyone is in a position to do that. When your the "IT Guy" and other people who aren't the "IT Guy" are telling you "it's OK to do it wrong" it's time to walk, they clearly have no respect for your knowledge/talent/position - so let this be their problem, not yours.