I assess each student one-on-one at the beginning of the year (using the Math Assessment Interview a.k.a. Early Numeracy Interview) and after the assessment I read back through the record sheet and tick what they can do on the white version of the caterpillar. I find it's easier to keep the caterpillars in my assessment folder than the A3 assessment sheet and a copy the caterpillars can also be sent home in the students Journals at the end of Term 1.
A bubble gets coloured in after I have seen this child do this skill 3 times (during daily counting, during a math game, one-on-one, in a small group, etc).
I do not expect all of the bubbles to get coloured in because some are extension, for example, the counting 20 objects for Prep (this is a goal by the end of the year but some students can already do this when they come to school).
Hope this is simple & useful. Sorry if it doesn't sound it but I promise it really is :)