A device implemented method diagnoses faults in a machine system or the like having a plurality of multi-state operating elements which are controlled by commands issued by a programmable controller. The method involves sensing the issuance of each command, sensing each change in state of an operating element and then periodically correlating the sensed commands with the sensed changes in operating states; the failure to correlate a sensed command with a sensed change in state is used to indicate the existence of an operating fault. The method is implemented by a microcomputer system which receives data in the form of commands and state changes from the programmable controller, and performs the correlation by comparing the sensed data with a memory-stored diagnostic table of commands and respectively associated state changes in order to determine whether a command has been issued that did not result in a change of state and whether a change in state has occurred without a corresponding command having been issued. The microcomputer system includes a diagnostic keyboard/display terminal to permit editing of the diagnostic table and generation of various fault reports.