The disclosure provides assay systems for evaluating the presence of bone morphogenetic protein (BMP) activity in a cell by evaluating the gene expression of secreted Frizzled Related Protein 2 and 3 (sFRP2 and sFRP3). The sFRP2 and sFRP3 gene expression may be detected at the RNA or protein levels. The methods include methods for evaluating exogenous and endogenous BMP expression and utilize both genomic sFRP2 and sFRP3 genes and reporter constructs.