There is no sound in a Linux virtual machine on a Mac computer with Apple M1 chip.
Sound in Linux virtual machines in Parallels Desktop 16.5 for Mac computers with M1 chip is currently not supported. We keep working to implement support.
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If you have a USB headset, as a potential workaround, you may connect the headset directly to the virtual machine.
To do that, simply run the virtual machine and in the top menu click Devices > USB & Bluetooth and select the USB headset in the list.
With this approach, the sound is likely to work, but the quality may suffer. Meanwhile, when connected to the virtual machine, the USB headset will not be accessible on the macOS side.