Preheat oven to 350 degrees F. Spray 8-inch pan with non-stick spray and set aside. In a small bowl, whisk together flour, baking powder, baking soda and salt. In a large bowl, cream together butter and sugar until light and fluffy. Beat in egg, followed by vanilla extract. Mix in half of the flour mixture, followed by the Irish cream and milk, then the remaining flour mixture and mix til well blended. Pour batter into prepared pan.
Bake for approximately 24 minutes or until a toothpick inserted in the center comes out clean. Cool in pan on a wire rack until completely cool. Turn out cooled cake onto a platter and make the glaze.
To make the glaze, add all the ingredients in a small bowl and mix until smooth and pourable. Add more milk a half teaspoon at a time if needed. Garnish the cake with Cappuccino chips around edges or chocolate chips before the glaze sets up, if desired.