Can't hear audio from desktop instance connected to Windows 2012 Terminal Server

Question

I'm trying to help a colleague set up an application on a desktop instance of Windows Terminal Server. The problem is that the application is supposed to receive an audio stream, which you should hear on your desktop speakers. Also you should be able to transmit audio from your desktop mic to the application. Those functions aren't working, even though the application is receiving the audio stream. We can tell because there's and indication of the audio its receiving. However the application is responsive to mouse clicks. The audio does seem to be connected from the Terminal server to the desktop instance, as when he plays MP3s with VLC media player on the desktop instance he can hear it in his speakers. By the way, his client machine is a C10 Wyse terminal.

Thanks for your help.