I recently discovered The Reading Genie. I found a phoneme awareness test from the Reading Genie to find out if a child can hear the separate sounds in words.Ready, Set, Read posted a fun sound matching idea to develop phonological awareness in young children.
Hearing separate sounds is words is a skill needed to read and write. This skill can be practiced and improved. Here's another post I wrote that might help. Teaching a Child to Separate Sounds in Words