He is playing downloaded movie/show files, probably torrented......the smaller ones use aac instead of ac3.
Kodi, which I believe is what he is using since he mentions the transcoding option...has an issue with some aac no matter what containers it's in.
Just about everything is mkv nowadays..
This is really a non issue...if it plays, all is fine.
When an AVR states what audio formats it plays, it doesn't mean that format stuck inside a container with video also.