HomeMy WebLinkAboutSingle Audit Report June 30, 1994 4
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TOWN OF MARANA
Marana, Arizona
SINGLE AUDIT REPORTS
June 30, 1994
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TABLE OF CONTENTS
1 PAGE
INDEPENDENT AUDITOR'S REPORT ON SCHEDULE OF FEDERAL
FINANCIAL ASSISTANCE 1
i SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE 2
1 INDEPENDENT AUDITOR'S REPORT ON THE INTERNAL CONTROL
STRUCTURE IN ACCORDANCE WITH GOVERNMENT AUDITING
STANDARDS 3
1
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH LAWS AND
REGULATIONS BASED ON AN AUDIT OF FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING
STANDARDS 6
INDEPENDENT AUDITOR'S REPORT ON THE INTERNAL CONTROL
STRUCTURE USED IN ADMINISTERING FEDERAL FINANCIAL
ASSISTANCE PROGRAMS 7
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH THE
GENERAL REQUIREMENTS APPLICABLE TO FEDERAL FINANCIAL
ASSISTANCE PROGRAMS 10
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH SPECIFIC
REQUIREMENTS APPLICABLE TO NONMAJOR FEDERAL FINANCIAL
ASSISTANCE PROGRAM TRANSACTIONS 11
SCHEDULE OF FINDINGS AND QUESTIONED COSTS 12
SCHEDULE OF PRIOR YEAR'S FINDINGS 13
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3
•
? -/ Clifton,
Gunderson & Co.
Certified Public Accountants & Consultants
Honorable Mayor and Town Council
• Town of Marana, Arizona
INDEPENDENT AUDITOR'S REPORT ON SCHEDULE
OF FEDERAL FINANCIAL ASSISTANCE
3
We have audited the general purpose financial statements of the Town of Marana, Arizona for
the year ended June 30, 1994, and have issued our report thereon dated October 31, 1994.
These general purpose financial statements are the responsibility of the Town of Marana,
Arizona's management. Our responsibility is to express an opinion on these general purpose
0 financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards, "Government
Auditing Standards," issued by the Comptroller General of the United States, and the provisions
of Office of Management and Budget (OMB) Circular A -128, "Audits of State and Local
Governments." These standards and OMB Circular A -128 require that we plan and perform the
audit to obtain reasonable assurance about whether the general purpose financial statements are
3 free of material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the general purpose fmancial statements. An audit also includes
4 assessing the accounting principles used and significant estimates made by management, as well
4 as evaluating the overall financial statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
0
Our audit was made for the purpose of forming an opinion on the general purpose financial
statements of the Town of Marana, Arizona taken as a whole. The accompanying schedule of
federal financial assistance is presented for purposes of additional analysis and is not a required
part of the general purpose financial statements. The information in that schedule has been
I 0 subjected to the auditing procedures applied in the audit of the general purpose fmancial
statements and, in our opinion, is presented fairly, in all material respects, in relation to the
general purpose financial statements taken as a whole.
C 1 t --. ;
Tu son, Arizona
October 31, 1994
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Clifton,
• Gunderson & Co.
Certified Public Accountants & Consultants
Honorable Mayor and Town Council
Town of Marana, Arizona
INDEPENDENT AUDITOR'S REPORT ON THE INTERNAL CONTROL STRUCTURE
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
i We have audited the general purpose fmancial statements of the Town of Marana, Arizona for
the year ended June 30, 1994, and have issued our report thereon dated October 31, 1994.
We conducted our audit in accordance with generally accepted auditing standards, "Government
Auditing Standards," issued by the Comptroller General of the United States, and the provisions
' of Office of Management and Budget (OMB) Circular A -128, "Audits of State and Local
Governments. " These standards and OMB Circular A -128 require that we plan and perform the
audit to obtain reasonable assurance about whether the general purpose financial statements are
free of material misstatement.
In planning and performing our audit of the general purpose financial statements of the Town
of Marana, Arizona for the year ended June 30, 1994, we considered its internal control
structure in order to determine our auditing procedures for the purpose of expressing an opinion
on the general purpose financial statements and not to provide assurance on the internal control
structure.
The management of the Town of Marana, Arizona is responsible for establishing and maintaining
an internal control structure. In fulfilling this responsibility, estimates and judgments by
management are required to assess the expected benefits and related costs of internal control
structure policies and procedures. The objectives of an internal control structure are to provide
management with reasonable, but not absolute, assurance that assets are safeguarded against loss
from unauthorized use or disposition, and that transactions are executed in accordance with
management's authorization and recorded properly to permit the preparation of general purpose
financial statements in accordance with generally accepted accounting principles. Because of
inherent limitations in any internal control structure, errors or irregularities may nevertheless
occur and not be detected. Also, projection of any evaluation of the structure to future periods
is subject to the risk that procedures may become inadequate because of changes in conditions
or that the effectiveness of the design and operation of policies and procedures may deteriorate.
For the purpose of this report, we have classified the significant internal control structure
policies and procedures in the following categories:
Cash
Fixed assets
Long -term debt
Revenue, receivables and receipts
Expenditures and accounts payable
Government fmancial assistance programs
Members Of
INTERNATIONAL
3
AMERICAN INSTITUTE
OF CERi1RED PUBUC
ACCOUNTANTS
ARIZONA COLORADO ILLINOIS INDIANA IOWA MARYLAND MISSOURI NEW MEXICO OHIO WISCONSIN
Honorable Mayor and Town Council
Town of Marana, Arizona
General requirements:
Political activity
Davis -Bacon Act
Civil rights
Cash management
Drug -free workplace
Allowable costs /cost principles
Administrative requirements
Specific requirements:
Types of services allowed or unallowed
Eligibility
For all of the internal control categories listed above, we obtained an understanding of the design
of relevant policies and procedures and determined whether they have been placed in operation,
and we assessed control risk.
We noted certain matters involving the internal control structure and its operation that we
consider to be reportable conditions under the standards established by the American Institute
of Certified Public Accountants. Reportable conditions involve matters coming to our attention
• relating to significant deficiencies in the design or operation of the internal control structure, that
in our judgment, could adversely affect the Town's ability to record, process, summarize and
report financial data in a manner that is consistent with the assertions of management in the
general purpose financial statements.
4
We noted the following reportable conditions:
1. GENERAL LEDGER
Condition: The Town's general ledger utilized for fiscal 1994 did not segregate activities
by fund.
4
Criteria, effect and cause: Utilization of a general ledger system that segregates all
activities by fund is necessary in order to assure the propriety of reporting in financial
statements and grantor reports. Without such a system, financial statements could be
misstated. Such a system has not been utilized because the Town has had a limited
number of activities that needed to be segregated in the general ledger.
Recommendation: We suggest the Town implement procedures to record and segregate
all activities of the Town by fund in its general ledger. With the growth and expansion
of the Town, it is becoming too cumbersome to manually segregate Town activities
recorded within a combined general ledger. Segregation will enable the Town to better
report financial activities, provide more assurance to the Town relative to grantor
compliance requirements and provide better information as to the cost of certain activities
in order to determine self - sufficiency.
4
• Management's response and corrective plan: The Town has made substantial improvement
in the maintenance of the general ledger over the last couple of years. In recognition of
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Honorable Mayor and Town Council
Town of Marana, Arizona
the Town's rapid growth, the fiscal 1995 budget includes a line item for the purchase of
a new general ledger system that will incorporate fund accounting applications. It is
planned that such a system will be purchased in late fiscal 1995, so that it can replace the
current general ledger system at the start of fiscal 1996.
2. FIXED ASSET INVENTORY
Condition: The Town has not recently conducted a reconciliation of its physical property
records and the items reflected in its general fixed assets group of accounts. In addition,
the Town is not recording donated assets.
Criteria, effect and cause: In order to maintain control over fixed assets, periodic physical
inventories are necessary with any appropriate adjustments to the general ledger. Without
such inventories, financial statements could be misstated. The Town has not performed
such an inventory because it has had a limited number of fixed assets before its recent
dramatic growth.
Recommendation: We recommend that a physical inventory of property be conducted in
the near future, and that a reconciliation of that inventory be made to the general ledger,
with all appropriate adjustments being investigated and made, including those for donated
assets. Detailed schedules of the fixed asset history have been provided by us to the Town
to facilitate this physical inventory.
Management's response and corrective plan: With the Town's dramatic growth and recent
substantial purchases of new fixed assets, management recognizes the importance of
performing a physical inventory of fixed assets and upgrading the Town's fixed asset
records. Such inventory policies and procedures will be implemented by the end of fiscal
1995.
A material weakness is a reportable condition in which the design or operation of the internal
control structure elements does not reduce to a relatively low level the risk that errors or
irregularities in amounts that would be material in relation to the general purpose financial
statements being audited may occur and not be detected within a timely period by employees in
the normal course of performing their assigned functions.
Our consideration of the internal control structure would not necessarily disclose all matters in
the internal control structure that might be reportable conditions and, accordingly, would not
necessarily disclose all reportable conditions that are also considered to be material weaknesses
as defined above. However, we believe none of the reportable conditions described above are
material weaknesses.
This report is intended for the information of the Town Council, management and various
providers of governmental financial assistance. However, this report is a matter of public record
and its distribution is not limited.
4
Tucson, Arizona
October 31, 1994
4
5
Clifton,
✓ Gunderson & Co.
Certified Public Accountants & Consultants
Honorable Mayor and Town Council
0 Town of Marana, Arizona
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH
LAWS AND REGULATIONS BASED ON AN
a AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS
a
We have audited the general purpose financial statements of the Town of Marana, Arizona as
of and for the year ended June 30, 1994, and have issued our report thereon dated October 31,
1994.
We conducted our audit in accordance with generally accepted auditing standards, "Government
Auditing Standards, " issued by the Comptroller General of the United States, and the provisions
0 of Office of Management and Budget (OMB) Circular A -128, "Audits of State and Local
Governments. " These standards and OMB Circular A -128 require that we plan and perform the
audit to obtain reasonable assurance about whether the general purpose financial statements are
free of material misstatement.
Compliance with laws, regulations, contracts and grants applicable to the Town of Marana,
Arizona is the responsibility of the Town of Marana, Arizona's management. As part of
obtaining reasonable assurance about whether the general purpose financial statements are free
of material misstatement, we performed tests of the Town's compliance with certain provisions
of laws, regulations, contracts and grants. However, our objective was not to provide an
opinion on overall compliance with such provisions. Accordingly, we do not express such an
opinion.
The results of our tests indicate that, with respect to the items tested, the Town of Marana,
Arizona complied, in all material respects, with the provisions referred to in the preceding
i paragraph. With respect to items not tested, nothing came to our attention that caused us to
believe that the Town had not complied, in all material respects, with those provisions.
This report is intended for the information of the Town Council, management and various
providers of governmental financial assistance. However, this report is a matter of public record
and its distribution is not limited.
1
Ce/L-, 464 -. 9E&
k Tucson, Arizona
October 31, 1994 Members Of
6 INTERNATIONAL
AMERICAN INSTITUTE
OF CERTIFIED PUBLIC
ACCOUNTANTS COLORADO ILLINOIS INDIANA IOWA MARYLAND MISSOURI NEW MEXICO OHIO WISCONSIN
Clifton,
' L Gunderson & Co
Certified Public Accountants & Consultants
Honorable Mayor and Town Council
Town of Marana, Arizona
4
4
INDEPENDENT AUDITOR'S REPORT ON THE INTERNAL CONTROL STRUCTURE
USED IN ADMINISTERING FEDERAL FINANCIAL ASSISTANCE PROGRAMS
4
We have audited the general purpose financial statements of the Town of Marana, Arizona as
4 of and for the year ended June 30, 1994, and have issued our report thereon dated October 31,
1994.
We conducted our audit in accordance with generally accepted auditing standards, "Government
Auditing Standards," issued by the Comptroller General of the United States, and the provisions
of Office of Management and Budget (OMB) Circular A -128, "Audits of State and Local
Governments:" These standards and OMB Circular A -128 require that we plan and perform the
4 audit to obtain reasonable assurance about whether the general purpose financial statements are
free of material misstatement. •
4 In planning and performing our audit for the year ended June 30, 1994, we considered the
Town's internal control structure in order to determine our auditing procedures for the purpose
4 of expressing our opinion on the general purpose financial statements of the Town and to report
on the internal control structure in accordance with OMB Circular A -128. This report addresses
our consideration of internal control structure policies and procedures relevant to compliance
with requirements applicable to federal financial assistance programs. We have addressed
internal control structure policies and procedures relevant to our audit of the general purpose
financial statements in a separate report dated October 31, 1994.
4 The management of the Town of Marana, Arizona is responsible for establishing and maintaining
an internal control structure. In fulfilling this responsibility, estimates and judgments by
• management are required to assess the expected benefits and related costs of internal control
structure policies and procedures. The objectives of an internal control structure are to provide
management with reasonable, but not absolute, assurance that assets are safeguarded against loss
from unauthorized use or disposition, that transactions are executed in accordance with
management's authorization and recorded properly to permit the preparation of general purpose
financial statements in accordance with generally accepted accounting principles, and that federal
financial assistance programs are managed in compliance with applicable laws and regulations.
Because of inherent limitations in any internal control structure, errors or irregularities may
nevertheless occur and not be detected. Also, projection of any evaluation of the structure to
future periods is subject to the risk that procedures may become inadequate because of changes
in conditions or that the effectiveness of the design and operation of policies and procedures may
deteriorate.
0
S Members Of
INTERNATIONAL
AL INTRNATIONAL
7
AMERICAN INSTITUTE
IP OF CERTIFIED PUBLIC
ARIZONA COLORADO ILLINOIS INDIANA IOWA MARYLAND MISSOURI NEW MEXICO OHIO WISCONSIN ACCOUNTANTS
Honorable Mayor and Town Council
Town of Marana, Arizona
For the purpose of this report, we have classified the significant internal control structure
policies and procedures in the following categories:
!�
Financial
• Cash
• Fixed assets
• Long -term debt
4 • Revenue, receivables and receipts
• Expenditures and accounts payable
4 • Governmental financial assistance programs
4 General requirements
4 • Political activity
• Davis -Bacon Act
4 • Civil rights
• Cash management
4 • Drug -free workplace
• Allowable costs /cost principles
• Administrative requirements
4
. Specific requirements
4 • Types of services allowed or unallowed
• Eligibility
4 For all of the internal control structure categories listed above, we obtained an understanding
of the design of relevant policies and procedures and determined whether they have been placed
in operation, and we assessed control risk.
•
4 During the year ended June 30, 1994, the Town of Marana, Arizona expended 75.9% of its total
4 federal financial assistance under the federal financial assistance program through Pima County
for its Community Development Block Grants.
We performed tests of controls, as required by OMB Circular A -128, to evaluate the
effectiveness of the design and operation of internal control structure policies and procedures that
we considered relevant to preventing or detecting material noncompliance with specific
requirements and general requirements, and requirements governing types of services allowed
or unallowed and eligibility that are applicable to the aforementioned nonmajor program. Our
procedures were less in scope than would be necessary to render an opinion on these internal
control structure policies and procedures. Accordingly, we do not express such an opinion.
We noted a certain matter involving the internal control structure and its operation that we
consider to be a reportable condition under standards established by the American Institute of
Certified Public Accountants. Reportable conditions involve matters coming to our attention
relating to significant deficiencies in the design or operation of the internal control structure, that
in our judgment, could adversely affect the Town's ability to administer federal financial
assistance programs in accordance with applicable laws and regulations.
8
Honorable Mayor and Town Council
Town of Marana, Arizona
We noted the following reportable condition:
GENERAL LEDGER
4 Condition: The Town's general ledger utilized for fiscal 1994 did not segregate activities
• by fund.
Criteria, effect and cause: Utilization of a general ledger system that segregates all
activities by fund is necessary in order to assure the propriety of reporting in financial
statements and grantor reports. Without such a system, grantor reports could be misstated.
Such a system has not been utilized because the Town has had a limited number of
activities that needed to be segregated in the general ledger.
•
Recommendation: We suggest the Town implement procedures to record and segregate
all activities of the Town by fund in its general ledger. With the growth and expansion
of the Town, it is becoming too cumbersome to manually segregate Town activities
• recorded within a combined general ledger. Segregation will enable the Town to better
report financial activities, provide more assurance to the Town relative to grantor
compliance requirements, and provide better information as to the cost of certain activities
• in order to determine self - sufficiency.
Management's response and corrective plan: The Town has made substantial improvement
in the maintenance of the general ledger over the last couple of years. In recognition of
the .Town's rapid growth, the fiscal 1995 budget includes a line item for the purchase of
a new general ledger system that will incorporate fund accounting applications. It is
planned that such a system will be purchased in late fiscal 1995, so that it can replace the
current general ledger system at the start of fiscal 1996.
•
0 A material weakness is a reportable condition in which the design or operation of the internal
control structure elements does not reduce to a relatively low level the risk that noncompliance
with laws and regulations that would be material to a federal financial assistance program may
occur and not be detected within a timely period by employees in the normal course of
performing their assigned functions.
0
Our consideration of the internal control structure would not necessarily disclose all matters in
the internal control structure that might be reportable conditions and, accordingly, would not
necessarily disclose all reportable conditions that are also considered to be material weaknesses
as defined above. However, we believe the reportable condition described above is not a
O material weakness.
This report is intended for the information of the Town Council, management and various
providers of governmental financial assistance. However, this report is a matter of public record
and its distribution is not limited.
Tu on, Arizona
October 31, 1994
0
O 9
O .
4
Clifton,
4 Gunderson & Co.
Certified Public Accountants & Consultants
4
Honorable Mayor and Town Council
4 Town of Marana, Arizona
4 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH THE GENERAL
REQUIREMENTS APPLICABLE TO FEDERAL FINANCIAL
4 ASSISTANCE PROGRAMS
4
We have audited the general purpose financial statements of the Town of Marana, Arizona as
of and for the year ended June 30, 1994, and have issued our report thereon dated October 31,
1994.
4
We have applied procedures to test the Town of Marana, Arizona's compliance with the
4 '` following requirements applicable to its federal financial assistance programs, which are
4' identified in the accompanying schedule of federal financial assistance for the year ended June
30, 1994:
General requirements:
Political activity
Davis -Bacon Act
Civil rights
Cash management
Drug -free workplace
Allowable costs /cost principles
Administrative requirements
Our procedures were limited to the applicable procedures described in the Office of Management
and Budget's "Compliance Supplement for Single Audits of State and Local Governments." Our
�j procedures were substantially less in scope than an audit, the objective of which is the expression
of an opinion on the Town of Marana, Arizona's compliance with the requirements listed in the
preceding paragraph. Accordingly, we do not express such an opinion.
• With respect to the items tested, the results of those procedures disclosed no material instances
• of noncompliance with the requirements listed in the second paragraph of this report. With
respect to items not tested, nothing came to our attention that caused us to believe that the Town
of Marana, Arizona had not complied, in all material respects, with those requirements.
This report is intended for the information of the Town Council, management and various
providers of governmental financial assistance. However, this report is a matter of public record
and its distribution is not limited.
of
• T on, Arizona
October 31, 1994 Members Of
IS 15
10 INTERNATIONAL
AMERICAN INSTITUTE
OF CERTIFIED PUBLIC
ARIZONA COLORADO ILLINOIS INDIANA IOWA MARYLAND MISSOURI NEW MEXICO OHO WISCONSIN ACCOUNTANTS
qi
4/ Clifton,
1 Gunderson & Co.
Certified Public Accountants & Consultants
Honorable Mayor and Town Council
+' Town of Marana, Arizona
4
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH SPECIFIC
REQUIREMENTS APPLICABLE TO NONMAJOR FEDERAL FINANCIAL
• ASSISTANCE PROGRAM TRANSACTIONS
• We have audited the general purpose financial statements of the Town of Marana, Arizona as
• of and for the year ended June 30, 1994, and have issued our report thereon dated October 31,
1994.
In connection with our audit of the 1994 general purpose financial statements of the Town of
Marana, Arizona and with our consideration of the Town of Marana, Arizona's internal control
structure used to administer the Town's federal financial assistance programs, as required by
Office of Management and Budget (OMB) Circular A -128, "Audits of State and Local
Governments," we selected certain transactions applicable to certain nonmajor federal financial •
assistance programs for the year ended June 30, 1994. As required by OMB Circular A -128,
we have performed auditing procedures to test compliance with the requirements governing types
of services allowed or unallowed and eligibility that are applicable to those transactions. Our
• procedures were substantially less in scope than an audit, the objective of which is the expression
of an opinion on the Town of Marana, Arizona's compliance with these requirements.
• Accordingly, we do not express such an opinion.
With respect to the items tested, the results of those procedures disclosed no material instances .
of noncompliance with the requirements listed in the preceding paragraph. With respect to items
not tested, nothing came to our attention that caused us to believe that the Town of Marana,
0 Arizona had not complied, in all material respects, with those requirements.
0 This report is intended for the information of the Town Council, management and the various
providers of governmental financial assistance. However, this report is a matter of public record
and its distribution is not limited.
0 gatatilo•—
4
Tucson, Arizona
October 31, 1994
0
Members Of
INTERNATIONAL
11
AMERICAN INSTITUTE
OF CERTIFIED PUBLIC
ARIZONA COLORADO ILLINOIS INDIANA IOWA MARYLAND MISSOURI NEW MEXICO OHIO WISCONSIN ACCOUNTANTS
4
TOWN OF MARANA, ARIZONA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended June 30, 1994
4
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None
•
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4
3
4
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4
4
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4
4
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4
•
12
•
TOWN OF MARANA, ARIZONA
SCHEDULE OF PRIOR YEAR'S FINDINGS
• Year Ended June 30, 1994
For the year ended June 30, 1993, it was found that the personnel files of three of four police
officers working in federally supported grant programs lacked documentation of the officer's
awareness of the Town's drug -free workplace policy. During our testing for fiscal 1994, we did
not note this as a recurring item for employees working under federal grants. In addition, there
,! was a finding noted for Davis -Bacon Act non - compliance. This finding was corrected, and was
not repeated as a finding for 1994.
0
Reportable conditions in the prior year for coordinating all accounting activities through the
• Town accountant, reconciling various revenue services through various department reports, and
O preparing budgets by purpose and not by object were corrected during the 1994 fiscal year.
Reportable conditions concerning the general ledger and a fixed asset inventory have been
• repeated in the fiscal 1994 reports. It was reported in the prior year that the Town maintained
deposits with a financial institution that were over the amount insured by the FDIC $100,000
limit. Although the Town had uncollateralized balances of $14,891 at June 30, 1994, this is not
repeated as a condition in the fiscal. 1994 reports because the Town tries to keep its balances
under $100,000 with financial institutions, the financial institution in question is a large
worldwide bank and cash forecasting methods used by the Town reduced the uncollateralized
amount from $133,017 at June 30, 1993, to $14,891 at June 30, 1994.
0
0
4
4
4
4
4
4
4
4
4
4
0
13
4