Yes. Absolutely let their mom be aware of what had taken place. If she is the main disciplinarian and care taker, she needs to know what is going on.
You may want to sit the two grandchildren together and explain to them that the money that is missing would have been used to pay for food, bills, medication, etc. Let them know that as a result, their visit may not be as fun (you may resort to feeding them macaroni and cheese and peanut butter sandwiches) Tell them that should they find the money, you can make changes with the present set up.
Ask their mother how would she handle something like that and if there had been incidents of this nature that she's aware of.