Were all the other kiddos eating cupcakes? I would not go by what a 3 yo child says, at least not 100%. According to a 3 yo dcb I used to have, I only fed him bread and water.
The cupcake issue is kind of a minor questionable thing out of your whole experience. Is there something else going like that would create major red flags? The potty accidents, also, can be easily explained. I don't know; have never had my children in dc. But as others have said, if you feel uncomfortable with all this, give notice and find someplace else or keep your child with you in your dc. Good Luck!!
As you well know, trust is the one key issue we all need to overcome in having a child in someone else's care. If there isn't any trust, you've got little left.
