To a large bowl, add the flour, baking powder, salt, milk, sugar and butter.
Using a pastry cutter or a large, sturdy fork, cut the butter into the flour mixture until the butter is in small crumbles and incorporated with the dry ingredients.
Add about 1/4 of the Funfetti candy sprinkles, and use your hands to knead the dough. Continue adding more Funfetti candy sprinkles and kneading the dough until the candy is evenly dispersed throughout the dough.
Onto a floured cutting board, roll out the dough until it's about 1-1/2 inches thick.
Using a 3-inch circular biscuit or cookie cutter, cut the dough into 5 biscuits.
Grease an 8-inch iron skillet with butter, and add the biscuits to the pan.
To another small bowl, add the egg and water. Whisk together.
Brush the egg mixture on top of the biscuits.
Bake until the tops of the biscuits start to turn a light golden color (about 9 – 10 minutes).
Place the biscuits on a serving dish. Drizzle icing on top, and garnish with Funfetti candy sprinkles.
For the icing
To a medium-size bowl, add all the ingredients, and stir together until incorporated.