Combine prunes and water in a saucepan. Bring to a boil; cover and simmer 2 minutes. Drain; reserving 2 tablespoons juice for frosting. Set aside.
Cream shortening; gradually add sugar, beating well. Add eggs, one at a time, beating well after each addition.
Combine 1 cup flour and remaining dry ingredients; add to creamed mixture alternately with buttermilk, beginning and ending with flour mixture. Dredge prunes in remaining 1/2 cup flour; stir to coat well. Stir into batter.
Pour batter into 2 greased and floured 9-inch round cake pans. Bake at 350° for 30 minutes or until a wooden pick inserted in center comes out clean. Cool in pans 10 minutes: remove layers from pans, and cool completely. Spread Cream Frosting between layers and on top and sides of cake. Garnish with whole sugarcoated prunes, if desired.