In a large bowl, whisk together flour, baking soda, baking powder, salt, and cocoa powder.

Beat butter with a mixture until it has softened and whipped slightly. Add white sugar, and beat until incorporated.

Add vanilla extract and egg, and beat until smooth.

Add about a third of the flour mixture, and beat until mostly incorporated. Then add about half of the water. Add another third of the flour, then the rest of the water, and finally the remaining flour, letting the batter incorporate well after each step.

Divide the batter evenly among the 12 muffins cups.

Bake for 20-25 minutes, or until a skewer inserted into the middle of the cupcakes comes out cleanly.

Let cool completely before frosting.

Heat a medium skillet over medium-low heat. Add coconut flakes and cook, stirring constantly, until flakes are golden brown, or about 5 minutes. Remove coconut flakes from the skillet and set aside.

Add 1 1/2 cup powder sugar, about 1/2 cup at a time.

Add 1/2 cup caramel sauce, and whip to combine. Add remaining 1 cup powder sugar and whip until well combined.