Audit findings reveal a refund to a borrower - however, these were identified in an audit and not within 60 days post closing. Is a revised CD required? Just a cover letter?

You have an non-curable violation. What you do at this point will be based on a good faith attempt to avoid civil and regulatory liability. Most lenders treat this situation no different than if you found it within 60 days.

So, would you provide a revised CD along with a cover letter explaining the credit? This loan is more than 120 days old. To me, a letter explaining that the error was identified and here's a check seems enough.

Would a revised CD with a copy of the check and letter provide for a cleaner loan file? yes....but is it required to send a revised PCCD and possibly confuse the borrower???

As I previously indicated - totally a business decision.