KUNMING, China, Nov. 14 /Xinhua-PRNewswire-FirstCall/ -- China Shenghuo Pharmaceutical Holdings, Inc. (Amex: KUN) ('China Shenghuo' or 'the Company'), today announced the findings from its Audit Committee's previously announced independent internal investigation into the Company's accounting for certain sales representative commission advances and trade receivables, and other financial reporting matters.

The internal investigation found that two of the Company's financial department personnel improperly accounted for the collection of certain trade receivables. The effect of these errors was to understate the Company's bad debt allowance, which resulted in the understatement of general and administrative expenses for fiscal year 2007 and first quarter of 2008. However, the Audit Committee found no evidence to suggest that these accounting errors were made at the direction of, or with the knowledge or involvement of, the Company's executive officers and management.

As a result, the Company is restating its financial statements for the fiscal year ended December 31, 2007 and the fiscal quarter ended March 31, 2008. The restated financials will be released shortly.

The two employees found to be responsible for the accounting errors have been removed from their positions. The Company also announced today the appointment of Wendy Fu as the Company's new Chief Financial Officer. Wendy is replacing Ms. Gao, the Company's former Chief Financial Officer, who resigned effective November 10, 2008.

In her new position, Ms. Fu will be responsible for the Company's corporate finances and administration and she will manage all financial reporting responsibilities. Ms. Fu is a U.S. licensed CPA with over 10 years of professional experience in accounting, finance and auditing, and she holds a master's degree in accounting from the University of Texas, Austin.

About China Shenghuo

Founded in 1995, China Shenghuo is a specialty pharmaceutical company that focuses on the research, development, manufacture and marketing of Sanchi-based medicinal and pharmaceutical, nutritional supplement and cosmetic products. Through its subsidiary, Kunming Shenghuo Pharmaceutical (Group) Co., Ltd., it owns thirty SFDA (State Food and Drug Administration) approved medicines, including the flagship product Xuesaitong Soft Capsules, which has already been listed in the Insurance Catalogue.