Pour the vegetable oil into a heavy bottom skillet or Dutch oven until 3-inches deep. Heat the oil over medium-high heat to 350 degrees F.
While the oil is pre-heating, remove the biscuits from the packaging and separate into individual rounds on a cutting board. Using a small biscuit cutter, or the round top of a milk carton, cut out the center hole, reserving for donut holes.
Place 2-3 donuts into the hot oil and fry 1-2 minutes on each side. Adjust the heat as necessary to keep the oil temperature between 350 degrees to 380 degrees F. Use a slotted spoon to carefully remove the donuts from the oil and transfer to a paper towel lined plate to drain excess oil. Repeat with remaining dough, ending with the donut holes.
While the donuts are cooling, make the icing. Beat the cream cheese and 1 tablespoon of the milk until creamy. Stir in the powdered sugar and remaining 1 tablespoon milk. Mix on medium speed until creamy and spreadable.
Spread the cream cheese icing on each donut and sprinkle with the cereal. Serve immediately.