Grace, you can subtly evaluate how well he is doing at spelling from memory by watching his eyes as he transcribes. If he looks at one or two words as a phrase, then looks at the lines where he is writing and writes the whole phrase without looking back, he is writing from memory. That’s how transcription should be done—the goal—and how it will prepare him for dictation (writing the entire passage without looking back). Some kids reach that goal easily; others need a little time to build their confidence.
In lesson 8 of the teacher book, you will find a suggestion to ask him to spell a word or a phrase orally (without looking) after he has finished the transcription. That’s another way to encourage him to pay attention to the spellings. Those little suggestions will be sprinkled throughout the exercises, but you can do it every time he transcribes if you want to.