For the example here, I am using a bibliography from a collection of essays, so the bibliography is only for one chapter. That both simplifies and complicates things, but the principles are the same.
I always start with the bibliography when I edit. It makes sense to get that checked and fixed first. Otherwise, if you edit the chapter first, any errors you find in the bibliography will need to be corrected on stuff you've already done. When you are paid by the page, which I usually am, that's costing you money—and causing more stress to hit the deadline.
Before I start, I create a separate file with the bibliography and name it Chapter# Working Bibliography, so in this example, the file is 20_Working_Bibliography.docx. For chapters below ten, I use a leading zero to keep them sorted properly, so 07_Working_Bibliography.docx, etc.
I check every bibliography entry for accuracy using WorldCat for books, and Google search for articles. When WorldCat results seem contradictory, I try to find the publisher's website. Whatever you do, don't rely on Amazon's listings; they are notoriously error-ridden, just ask any publisher!
For articles, a Google search will usually show you an academia.edu or some other web despository, which is really nice, because they usually have the original document. Barring that, another gold is a book reference. If the Google book reference disagrees with your entry, try a different book. In cases of disagreement, if I can't find the original, I go with the best two out of three or three out of four. If it is a mess everywhere, I put an author query on it for them to check.
The next problem is how to keep track of short forms and to prevent a full entry twice or only a short entry. And, most importantly, when an author has been referenced in the body text, so you don't use their first name twice. The following example is what works for me. Your mileage may vary! Note that for this bibliography, I had to create it from the footnotes, so their are no em-dashes for multiple entries of the same author. When I copy it into the chapter at the end, I fix that. But it is handy for creating a sorted combined bibliography (I'll talk about that in a future post—consistency in multiple author volumes is a big concern).
This is from chapter 20. The "20." at the beginning of an entry means it has been referenced once. The underlined portion means that it has been referenced by that short form later in the chapter. The asterisk means that they have been referenced by first name in the body text.
After editing the chapter, I always check to make sure everything in the bibliography has been referenced. Because there is the chapter number at the beginning of the entry, it is easy to scan down the page. I usually enter it as a search term to highlight it, making it easier to see.
If an entry doesn't have a number in front, I do a search on the chapter to confirm it is missing. If it is, I either mark it with a query, or if instructed by the publisher, delete it from the chapter bibliography. I always leave it in my working bibliography! Very few publishers allow uncited entries in the bibliography, but sometimes they will allow a "Related Works" or "Further Reading" section, which is why I keep the original intact. (It's also fun to see how much an author "pads" their bibliography—expecially if it is a revised dissertation. The highest percentage I've ever seen is 25 percent. Most come in around 2–3 percent.)
Here's the table of contents for all the copyediting stuff.