Combine water and oats; cool to room temperature. Cream butter, brown sugar, sugar and vanilla; beat in eggs. Blend in oatmeal mix. Combine flour, baking soda, baking powder, cinnamon and salt. Add to creamed mix.
Beat 1 minute on medium speed. Pour batter into a greased and floured 13?x9? pan. Chop peanut butter cups and sprinkle on top of batter; do not stir.
Bake at 350 degrees 40-45 minutes.
Frosting: melt butter. Add chocolate and stir constantly over low heat until melted. Pour into a bowl and add remaining ingredients; beat until well blended. Chill to spreading consistency and frost cake.