I just caught the info. about this worry being generated by a home inspector. I have been in the trades for decades as a builder and electrician. To put it as mildly as possible, I fucking hate home inspectors. Most are a waste of good air, and should be forced out of the racket. There isn't another game out there where you can become an "authority" without knowing your ass from your ear, and create an absolute clusterfuck by offering your "expert opinion" even if you have no experience, knowledge, professional standing, or a clue. If your house was built to nominally half-assed standards, as in the siding was cut reasonably well to fit around the windows, and a reasonable attempt was made to caulk the opening, that's a wrap. You own a reasonably well detailed finished product. Like most inspectors, your's knows enough to be dangerous and that's it. When you are dealing with a structure that uses a sheet product for siding, any flashing is built into the system as the place is being constructed. For example, you install the windows, then install a flashing, which would be typically called a Z or head flashing. At this point the siding is installed OVER the flashing to cap the upper leg of the flashing. This is called "Shingle lapping" where each exterior layer overlaps the last to form a water resistant barrier. By now it should be obvious that you cannot effectively install this stuff AFTER the place is sided.
This type of stupid bullshit is common with home inspectors, and unfortunately causes a lot of needless anxiety. One reason the industry went to flanged windows was to eliminate the need for a lot of flashing, and depending on the ability of a talented carpenter to fabricate and install it properly.
Relax, everything is cool here. Check the caulking, touch up anything that loose or damaged and forget about it. Fucking home inspectors, it's enough to make my head hurt.