Usually this includes portfolio assessment. In langauge testing, it may also include student interviews and checklists (e.g., on a scale from 1 to 5 the student or teacher rates his or her ability to do such tasks as introducing one's family).
While various goverments in Europe and Canada often employ competency evaluation to evaluate bilingual abilities of public employees, it has only recently begun to receive attention from the United States where large testing corporations have dominated language evaluation with financially lucrative performance tests such as the TOEFL, MCAT and SAT tests.
Fred Genesee at McGill University is one of the leading researchers in competency evaluation.