It has been noted elsewhere in this thread that Martin Winterkorn was 'hands-on to the point of being a control-freak' and that there was no way in which he would not have been aware of this. Note the amount of technical knowledge present in the VW boards and at the C level is such that they could have cut through all the secrecy and other red tape if they had wanted to. It would have also been impossible to hide this from the auditors if they had simply been of the 'trust but verify' mentality that one would expect of seasoned auditors and I find it hard to believe that a company like VW (which apparently has been caught cheating before when it comes to emissions testing) would be so incompetent at this that it could have gone on for so long. All this besides the fact that 'miracles' simply don't exist and if there is one thing that sets an auditor off it is 'too good to be true'.

An ECU is not a 'big complicated thing', there is a ton of software in a car but the ECU itself happens to be one of the more easily understood parts where anything that does not have an obvious and direct function stands out like a sore tooth. There is also a very distinct point in time where the problems magically disappeared and of course it would be a simple thing to review the changes committed around and prior to that time. (Let's at least assume they have some kind of source code control system.)

If anything the auditors are more trusted than the programmers and they would definitely have had insight into the ECU code.

It is not conceivable that there is some kind of 'the cube' like conspiracy where the parts each individually look clean because one fairly large chunk of code was contributed by the Bosch company and contained a fairly explicit piece of code to detect the test cycle. If it's labeled 'process bananas' and an auditor is not able to figure out what it does it is their duty to actually dig until they understand that piece, that is what they are paid for.

So I believe that you are principally right that besides one exec and a bunch of people down from there in the org chart they kept the number of people as limited as they could but there is no way the compliance department was this incompetent unless a rookie was specifically tasked with auditing that particular engine to make sure the cheating stayed hidden. A seasoned auditor would spot this in a heartbeat and no rookie should have been able to sign off on these changes on their own.

And 'plausible deniability' is a very very thin fig leaf away from being culpable, all it takes is a single email or confession to pierce that veil and with the number of people VW is throwing under the bus (and at ever higher levels) it is a matter of time before someone decides to come clean about the whole thing.