It also establishes depth and breadth of familiarity with a variety of fundamental topics demonstrated through exams and large programming projects: program design, networking, operating systems, security/cryptography, team software engineering practices, algorithmic techniques and analysis, etc.
You fundamentally cannot assess this as well as my alma mater can because my alma mater has 4 years of me working under realistic conditions (laptop, internet, colleagues, deadlines on the order of weeks) and you have, what, 5 hours of me standing at a whiteboard?
Credentials are seriously underrated.
CS programs are not created equal. If you find that candidates from a particular school aren't necessarily competent, then you should value candidates from better, harder schools. If you find that candidates from well-respected schools aren't necessarily competent, then you should respect them less (US News isn't always right) and respect other schools more.