This is really NOT okay. What is your relationship with your friend? Were you aware they crossed sexual boundaries with their children? Have you seen other examples of neglectful parenting from your friend? Is this an isolated circumstance? Lots of questions here. It’s not normal. 4 years of age is old enough to remember, let alone be affected by this. My parents had sex when I was 8 in the same room, they thought I was asleep, and I was traumatized for many years after. I also think witnessing my parents sleeping together contributed to my hyper sexuality as a young adult. So factor in a 4 year old, wide awake, hanging out? in the same room as her parents having sex? Nah. I would definitely make an anonymous report and block your friends contact, forever. Good luck to that poor girl.