Reserve 2 tablespoons frosting. Frost cake with remaining frosting. In upper left-hand corner of cake, lightly score 5x3 1/2-inch rectangle in frosting for blue area of flag; sprinkle with blue sugar. Cut 2 strips of clean white paper, 13 inches long and 1 1/2 inches wide. Cut a third strip, 8 inches long and 1 1/2 inches wide. Place strips lightly on cake to cover area for white stripes. Sprinkle red sugar on cake for red stripes. Remove paper strips. Top blue sugar with candy stars.