As per the manual:
Note: The Media system will play MP3, WMA, WAV, AIFF, M4A, FLAC, AAC, AMR, LPCM and ALAC files. Other formats are available. To maximize playback quality, it is recommended that lossless compression is used for any media files on USB. Failing this, it is recommended that compressed files utilize a minimum bitrate of 192 kb/s (a higher bitrate is strongly recommended).