If a child has great difficulty sounding out words, this slows down the rate of reading and it also negatively impacts her understanding of what she's read. If your children can remember what you read to them, this is a very good sign. It means that they have good auditory memory skills and are not confused by spoken language. Their phonics skills can be strengthened, their comprehension will improve. In the meantime, they should only be asked to remember information from passages that are read to them or that they can read fairly well.
On the other hand, if your kids have trouble understanding and remembering an age-appropriate story (ask a teacher or librarian for a good suggestion), then they might have a language-based learning disability which is affecting their ability to comprehend what they hear. It's possible they have both problems. If that's the case, keep in mind that learning to read successfully will be a real challenge for them.
There are many materials that help children improve reading and comprehension skills. When your children are evaluated, ask the specialists for materials that will be well-suited to their learning needs and compatible with their school's approach. There are increasing numbers of computer-based programs that help with reading comprehension. Ask the special education teacher or the technology expert at your children's school for recommendations. In the meantime, read to your children! This pleasurable activity will cost you nothing and help a lot in the long run, no matter what an evaluation turns up.