As you know best because you’re living it, you’ve described a complicated scenario—and some of the past dealings between the bank and your sister do sound rather “irregular,” to say
The best you might be able to do at this point is to find a way to go forward that protects your mother’s finances and ensures that she is getting the best possible care. Ironically, that may be happening if she is now in long-term care—and if state authorities intervened to get access to the records.
It sounds as if your sister no longer has access to the funds—and what may practically happen is that the nursing home will manage and account for most things. But make sure that this is true—and if you need help or assurance in this matter, consider contacting the ombudsman at your mother’s nursing home, who should be willing to help you straighten out this matter.
The rest of your concerns seem to be about history—and you will need to decide on your own whether you think it’s important to revisit that scene.
In an ideal world, you could sit down with your sister, explain your concern about your mother’s finances and ask her to clear up any questions you may have about how the money was spent over those previously unaccounted three years. By many lights, spending $17,000 in three years on your mother’s medical care and food and amenities does not seem to be an unreasonable amount. You might just need the assurance that the money was spent as represented.