I'm being accused of stealing something I didn't steal

Today I was checking on my friends iPhone on my church bus. He dropped a screw and I gave him his phone back when i exited the bus he still on there looking and there was a few other still on. Well now he told his parents I still have it and there saying I stole it. Well I didn't take it and my brother and a few other people were there. Maybe he lost it or left it in the seat. But he's blaming me! What will happen if they call the police? I know I gave it back to him! Now he's saying something different what should I do I'm not worried cause I didn't take it but still it looks bad What will the police say what can I do?

If he accuses you and the police investigate, tell the truth. Offer to take a polygraph test.

And what 'proof' does he have.

Just 'saying' something does not make it true.

Phones can still be tracked (if they are still on)
so go see where it is - install an app if needed using iTunes

But They need proof,
Stay calm, and say
"sorry that 'you misplaced it' but it is your phone, for you to keep good care of."

You can suggest the person/family
- install a tracking app
- ask the bus for video (they often have it for security reasons)
- ask the bus company if it was found on the bus (happens!)