If you don't want README,etc included add the foreign option. For example in your configure.ac file add:
AM_INIT_AUTOMAKE([foreign])
See Strictness in the Automake manual
It is possible to have one configuration file that sets many kinds of C flags which are used in the subdirectories. But unless you want to start to become a serious automake hacker, I'd start with the simple solution and use foreign.
Here is a little example to show how CFLAGScan be set from other things. For simplicity I'll just set CFLAGS based on another environment variable so I don't have to deal with configure args. And I'll set CFLAGS in the main file while what you want to do that is in a subdirectory file. I hope all of this will be straightforward to change.
My configure.ac file is:
AC_INIT([foo], [1.0], [https://example.com])
AM_INIT_AUTOMAKE()
AC_SUBST(PROJ1_CFLAGS)
AC_CONFIG_FILES([Makefile])
AC_OUTPUT
My Makefile.am file is:
CFLAGS=@PROJ1_CFLAGS@
Now to build everything:
$ autoreconf -fi
$ autoconf
$ CFLAGS='-g' PROJ1_CFLAGS='-Wall' ./configure
checking for a BSD-compatible install... /usr/bin/install -c
checking whether build environment is sane... yes
checking for a thread-safe mkdir -p... /bin/mkdir -p
checking for gawk... gawk
checking whether make sets $(MAKE)... yes
checking whether make supports nested variables... yes
checking that generated files are newer than configure... done
configure: creating ./config.status
config.status: creating Makefile
$
If you look in Makefile, you'll see:
CFLAGS='-Wall'
which was in fact set from the PROJ1_CFLAGS environment variable, not the CFLAGS environment variable.