What requirements are there for accountability and control of a "satellite" organization by the tax exempt organization providing umbrella exempt status?
Example: Suppose these facts: There is a church with tax exempt status under IRC Section 501(c)(3). The church houses a day care center which has tax exempt status under the umbrella of the church's exempt status. Payroll of day care employees (and related withholding remittances and payroll tax return filings) are handled by the church treasurer using a day care center checking account established for that purpose. Other day care operating expenses are paid out of a second checking account by the day care director. The day care director also controls distributions of day care funds to the payroll account and for the expense sharing arrangement with the church. The director also handles all receipt of and accounting for fees paid by parents. Internal control weaknesses notwithstanding, what, if any, legal requirements exist for the church to exercise oversight and/or control of the financial resources of the day care center in order to protect its tax exempt status under Section 501(c)(3)?
Would the requirements be different if the top organization was the central committee of a friends of the library group and the "satellites" were separate FOL groups for each of the branches in the city's public library system?