Push the digging tool into the ground about 4 inches deep, this way you will get all the roots to the grass and prevent damage. Cut a plug of grass in a semi-circle and pry it upward with the tool causing a hinge on the uncut side of the circled plug of grass. Note: If you do not do this properly, you will cause the grass to turn brown in that spot and it could take weeks for it to recover.
Now use a cloth (called a "drop cloth") to pile your soil on. This keeps the dirt from soiling the neat grass around the hole and you can also grab the corners of the drop cloth and pass the dirt over top of your coil to see if the item was in the dirt you extracted from the hole. Your item may be a deep target and this method allows you to dig very deep while keeping everything neat and orderly. Now you can also sweep your coil over the hole and the pile of dirt separately to better locate the item.
After you find your item, take the cloth to the edge of the hole and dump the dirt back in and pack it down. Now you should flip over the plug back into the hole (grass side up of course!). Then lightly stomp or press the plug of grass so that it is level or even with the the surrounding surface. You may even want to take your fingers and run them through the grass to groom it like you would with a comb or brush. No one should be able to tell that you just disturbed that area.