I ran across this with the AD&D ruleset and tested and it seems to still be an issue with the 5E one also. Situational desktop modifiers are not applied to initiative rolls.
In manager_action_init.lua in modRoll() above "ActionsManager2.encodeAdvantage()" at the end of the function I added this to correct it.
-- include desktop situation mods on initiative rolls
ActionsManager2.encodeDesktopMods(rRoll);
The "+/-" mod style options DO get applied, it's the +2/+5 or -2/-5 buttons that do not.