An audio system, method, and computer program product which includes a wearable audio device and a mobile peripheral device. Each device is capable of determining its respective absolute or relative position and orientation. Once the relative positions and orientations between the devices are known, virtual sound sources are generated at fixed positions and orientations relative to the peripheral device such that any change in position and/or orientation of the peripheral device produces a proportional change in the position and/or orientation of the virtual sound sources. Additionally, first order and second order reflected audio paths may be simulated for each virtual sound source to increase the realism of the simulated sources. Each sound path can be produced by modifying the original audio signal using head-related transfer functions (HRTFs) to simulate audio as though it were perceived by the user's left and right ears as coming from each virtual sound source.