In a mixer with the paddle attachment, combine powdered sugar and meringue powder.
Add water gradually until combined.
Increase speed to medium-high 5-7 minutes or until white, fluffy and icing loses its sheen.
Add small amounts of water to reach piping consistency. At this point, I tend to take a less traditional approach - aiming for a consistency between soft toothpaste and thick honey.
Fill an icing bag fitted with a round tip (or, in a pinch, a zip top bag with the corner snipped off). At that point, you can use the same batch of icing to cover the entire cookie- first by outlining the edge, and then filling in the center.
You may tint the icing using gel food coloring (liquid will change the consistency too much), but more often than not I use colored sugars to achieve my desired effect.