The best the old gentleman could do was weed out the poor liars who had loopholes in their methods and make guesswork on the rest. But regarding the safety of the Academy, he couldn't rely on his guesswork alone, that was just asking for a disaster. So after thinking for a long while and considering what he did know of the Academy's resources, he made a very simple system.
He would 'trust' people.
He couldn't stop people from lying, but what he could do, was give a 'mark' to everyone who came by announcing their cultivation to be above a certain stage.