DACs take data in PCM format. The application does the conversion from the file format to PCM (frequently using OS provided software libraries, but not always). Since the iPhone "Music" app does not support FLAC, some folks use a third-party app to play thier FLAC files on the iPhone. No DAC decodes WAV/AIFF/etc files unless it also acts as a source device (e.g. AirPlay, DNLP, USB memory sticks, etc).