The use of fluorescence correlation spectroscopy (FCS) to study conformational dynamics in diffusing biopolymers requires that the contributions to the signal due to translational diffusion are separated from those due to conformational dynamics. A simple approach that has been proposed to achieve this goal involves the analysis of fluctuations in fluorescence resonance energy transfer (FRET) efficiency. In this work, we investigate the applicability of this methodology by combining Monte Carlo simulations and experiments. Results show that diffusion does not contribute to the measured fluctuations in FRET efficiency in conditions where the relaxation time of the kinetic process is much shorter than the mean transit time of the molecules in the optical observation Volume. However, in contrast to what has been suggested in previous work, the contributions of diffusion are otherwise significant. Neglecting the contributions of diffusion can potentially lead to an erroneous interpretation of the kinetic mechanisms. As an example, we demonstrate that the analysis of FRET fluctuations in terms of a purely kinetic model would generally lead to the conclusion that the system presents complex kinetic behavior even for an idealized two-state system.