Not correct by any means, they should be run diagonally to allow drainage but being finished I seriously doubt you will get your builder to take all the siding off and redo it.

Thank you Millworkman. What is the worst case scenario in your opinion in terms of damage? Will it be limited solely to the siding or will any possible humidity go into the walls (insulation)? Can't the humidity still evaporate through the cedar siding?

Rot, the furring strips will trap the moisture.

The first pic shows some vertical pieces under the horizontal furring. If that pattern had been followed, the risk would be relieved. On the bright side, the rot damage will take years to show.

Creating a vented rain screen behind siding is a best practice, but not constructed as shown. I would investigate the potential for venting the horizontal void spaces at the corners using insect screen and some standoffs to create vent openings at the corner boards. It won't perform as well as a vertically vented system, but it's an improvement that can be implemented without tearing off all the siding.