If you have the time, talk to them separately. Group dynamics can interfere with an accurate assessment.
When I did this for the first time, we had made up a questionare form with certain questions that we thought the students should be able to answer at different levels. Then we would start out by asking the basic questions to see if the student could talk about things like family or food. If that seemed easy for them, then you gradually move up the scale to more complicated questions until you figure about where their limits are. This was just for oral; there were other tests for listening, reading and writing.