I imagine that they are just delayed, like it takes some time for the game to register the time after you hit the finish, the problem would be if the time it takes would be different for everyone because that could give them a disadvantage, but is the delay is the same for everyone then it shouldnt matter too much. Also the game isnt optimised enough to tell if the timer is too big of a deal.
It just makes timing it much longer and makes it harder for the player to understand if they have beaten a record or not, so it is probably just easier to rely on the timer even if its not completely accurate because everyone gets the same timer and the times are rounded the same for everyone.
Sorry did not know that the timer doesnt reset when youre holding down a key but would be glad if you can still tell what time it is, I might be wrong but it looks like the time just shows as the time in level 4.