If you are not going to claim him: Prepare and file an amended return not claiming him as your dependent and complete Form 8332 "Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent." Give the 8332 to his father so that he can attach it to his return.
If you are going to claim him his father will have to file an amended return. His father does not need to provide you with a 8832. (this form is only for the custodial parent to provide to the non custodial parent in the event the custodial parent gives up the dependent to the non custodial parent)
Hope this provides the clarity your were looking for, let me know if you have any further questions.
There is no "fix" to the him being audited. There may be many reasons why he is being audited. If this is the sole reason then it will be resolved.
Perhaps a good thing for him to do would be to send a letter, in response to the audit letter he received, stating that both of you claimed your son. He should state the steps that he is going to take to rectify the issue. You could perhaps give him a statement to accompany the letter stating that you erroneously claimed your son.
You should provide him with the 8332 as soon as possible. He can then submit that with a copy of his "as filed" return.
You should also amend your return as soon as possible. Don't forget to include a statement with the amended return stating that you erroneously claimed your son and that you have provided the non-custodial parent a completed Form 8332.
Hope this helps.
You should cash the check as the original return has already been processed and completed with the refund issued.
When you prepare the amended return you will calculate the amount owed.(Difference between what you received and what you should have received) You will submit the payment with your amended return.