You need to see a tax attorney right away. My first concern would be determining the nature and extent of any tax deficiency, and amend any required returns. Your parents may need to request a collection due process hearing (if eligible), request a waiver of penalties or file an offer in compromise. Other appeal rights may exist, and the tax situation should be resolved before deciding what to do with the preparer. I strongly suggest that you cease any effort to have the preparer assist in resolution of the problem which you believe the preparer created. The preparer might be civilly liable for damages and for tax penalties. You may also file a complaint with the AICPA (if a CPA) or with the IRS (if an enrolled agent). The action against the preparer should be taken only after addressing the more pressing tax issues and then determining whether there was negligence on the part of the preparer. Good luck.
The above "answer" is for discussion purposes only and is neither intended as legal advice nor to create an attorney-client relationship. An attorney-client relationship is not created until after an in person consultation and I agree in writing to provide representation. I am licensed solely in the state of Arizona. You should consult with a knowledgeable attorney in your jurisdiction.
There are various actions you can take against the preparer. However, they are unlikely to help you in the audit. Focus on the audit. Get the auditor the required proofs. Worry about the tax preparer later. You can report them to the IRS or file a lawsuit if they have sufficient insurance. Going after the tax preparer may ultimately be a fools errand. Focus on getting new representation, as needed, and/or rectifying the situation by cooperating with the auditor and proving correct expenses or providing a substituted return. This is your best bet.
Hire a tax attorney ASAP to get the audit cleaned up and sort out what if anything is owed. Then for the costs of cleaning up the mess you can likely proceed against the preparer's professional liability possibility, or individually if there is not a professional liability policy.
This answer is based on general legal principles only and is not intended to provide specific legal advice. This answer is for informational purposes only and does not constitute the formation of a lawyer-client relationship. Any reader of this answer should not make decisions based upon in without first directly consulting with an attorney