In a large skillet over high heat, melt the shortening and quickly brown the ground beef with the onion. Stir in water and bring to a boil. Cover, reduce heat to low and simmer for 30 minutes.
In a medium bowl, thoroughly mix the condensed cream of mushroom soup, sour cream, milk, salt and pepper. Set aside.
Pour meat mixture into a 9x13 inch baking dish. Arrange potatoes over the meat.
Pour soup mixture over the potatoes.
Sprinkle with Cheddar cheese. Top with whole wheat flake cereal.
Bake in preheated oven, uncovered, for 1 1/2 hours.