It is a derivative of what is called the "Risk Based Approach" in compliance, and is widely adopted. As for companies and accounting you can look into the dire

It is a derivative of what is called the "Risk Based Approach" in compliance, and is widely adopted. As for companies and accounting you can look into the directive 2013/34/EU that established micro, small, and medium sized companies based on their size. These types of companies have different reporting requirements.